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30. January 2020

Investing in Swiss Bonds: A comprehensive guide

Most investors believe that stock is the most traded asset in the world. The truth is that there’s another asset class that is 1.5 times the size of stocks.

We are talking, of course, about bonds. In 2017, the global bond market was sized at over $100 trillion, which dwarves the equity market (at $70 trillion). Your surprise would be forgiven because if you read the news, over 80% of the coverage concentrated exclusively on stocks.

In this article, we will dive deep into the bond world and explore the magical combination it has with Switzerland.



Bonds: a quick overview

Bonds are contractual debt instruments between a borrower (the debtor) and a lender (the creditor). There are usually 5 key characteristics of a bond:

  • Principal amount – the total amount borrowed by the debtor from the creditor.
  • Coupon rate – the interest rate paid on the principal by the debtor to the creditor.
  • Coupon interval – the frequency at which the coupon will be paid. Normally it is quarterly.
  • Duration – the length of the bond. The principal will need to be repaid at the end of the duration.
  • Collateral – debtor’s assets pledged to creditors as security on the loan, in case of default.

Just like stock investors, bond investors make money in 2 forms: income and capital gains. However, the mechanisms of how these 2 types of gains come into play are very different.

Unlike dividend (which is a payout from the profit a company makes to its shareholders), which can be variable and unpredictable, coupon (interest) on bonds that are paid out to bondholders is fixed and must be met no matter the circumstances. Failure to observe such a covenant would be treated as a default, which carries a significant penalty, not least the ability of bondholders to institute insolvency proceedings against the borrower.

The way how capital gains works in a bond is also different. Unlike stocks, where the price is based on discounting future earnings expectations into the present day, the principal bond amount (nominal value) should stay, theoretically at least, the same from issuance to maturity. If the par value is $100 at issuance, then at the end of the duration (e.g. in 20 years), investors should still get paid $100. Yet there are 2 factors which affect the price of bonds (assuming it is being publicly traded):

  • Risk-free return offered by alternative assets: due to the time value of money, where $100 in 20 years will be worth far less than $100 today (due to inflation and the cost of delayed gratification), investors are faced with alternatives when investing in fixed income assets. For example, when the base rate for bank deposits (which is considered to be risk-free) goes up, it makes deposits relatively more attractive than before, when compared to bonds. As a result, the demand for bonds will shift away (in magnitude proportional to the extent of the rise in the rate) towards deposit; thus causing a fall in bond prices.
  • Credit risk of the borrower: if a borrower could not pay back the principal at the end of the loan period (or it could not pay the coupon during that period), then the borrower would have defaulted on the bond. This degrades the creditworthiness of the borrower and makes it significantly more risky, thereby decreasing the attractiveness of its debt and hence leading to a decline in its bond price.


The charm of bonds

Bonds have quite different characteristics compared to stocks. As the coupon rate is normally fixed, investors can expect to receive a steady return over the duration of the bond (that’s why they are also known as fixed income). Bonds also enjoy liquidation preference over shares. This means in the event of financial distress by the debtor, bondholders will be paid first (once liquidation of a company has been completed) before shareholders (who hold stocks). These 2 key features make bonds less risky than stocks.

Furthermore, like stocks, most bonds can be publicly traded in exchanges, thereby increasing their liquidity and offering capital movement in addition to the income element. This makes bonds enjoy quasi-stock like features and broadens its appeal to investors.


The charm of investing in Switzerland

Switzerland has long been a popular investment destination as evidenced by the large flow of foreign direct investment (FDI) and a high current account surplus. There are 3 key reasons behind such popularity:

  1. High social-political stability – Switzerland is a landlocked, mountainous Alpine country in Western Europe. As a result, it has been historically incredibly difficult to invade. Combined with its declared political neutrality, it has experienced virtually no wars in the past few centuries.
  2. A diversified and highly advanced economy – the high level of stability has enabled Switzerland to focus its energy on developing its internal economy and as a result, it is a sophisticated, service-orientated advanced economy that is highly integrated with the EU (but not part of the union, thereby it enjoys a certain degree of autonomy).
  3. A sophisticated financial sector – also a result of Swiss stability, European aristocracy have for centuries, shielded their wealth in Switzerland, enjoying the anonymity and security it brings. Consequently, Switzerland has developed a more highly sophisticated financial sector (relative to its size) than rivals such as Paris and Frankfurt.


Types of bonds to invest

There are many different types of bonds to invest in, but they can be broadly broken down into 5 categories:

  • Government
  • Municipal
  • Corporate
  • RE bonds
  • P2P lending (mini-bond)


A deep dive into the different bonds in Switzerland


10-Year Government bonds


Underlying asset overview: lending capital to the Swiss government in return for a fixed interest payment.

Capital input requirement: CHF 10,000

Yield: -0.5% for the 10-year government bond

Capital value fluctuation: Nil

Income risks: N/A

Capital risk: very low

Payback period: 10 years

Liquidity: high as the bond is publicly traded

Ongoing management cost: very low (less than 0.5% of AUM)

Transaction cost: depending on the broker, around CHF 10 to 15 per trade

The Swiss Government’s 10-year bond is quite a conundrum. On the one hand, it is immensely popular with institutional investors (e.g. central banks, pension funds, mutual funds). On the other hand, it is a negative yield bond.

What does that mean? Instead of the borrower (i.e. the Swiss Government) paying a coupon (interest) to the creditors, a negative yield means the relationship is inverted. So, investors need to pay, regularly, for the privilege of lending money to the Swiss Government. This bond was issued with a -0.055% coupon rate, which meant that for every CHF 10,000 invested, investors were expected to fork out CHF 5.5 every year, until the maturity of the bond.

Why are the returns negative?

Swiss Government bonds are perceived to be an extremely safe asset class by investors (for the reasons outlined in the previous section). Consequently, demand for such bonds vastly exceeded supply and therefore the yield was naturally lowered. Furthermore, this bond was denominated to CHF, an extremely strong safe-haven currency that was expected to appreciate against others. As a result, even if investors had to forego the coupon payment (and even pay a small fee to the borrower), they were happy to do so as the gain in CHF (against their native currencies) would vastly outpace the loss in income.

Other examples of Swiss Government Bonds:


15-Year Geneva canton bond


Underlying asset overview: lending capital to the canton government to fund its operating and capital expenditures

Capital input requirement: CHF 50,000

Yield: 2.875% nominal coupon yield

Capital value fluctuation: usually within +/-10%

Income risks: very low

Capital risk: very low

Payback period: 15 years

Liquidity: relatively high as the bond is publicly traded

Ongoing management cost: very low (less than 0.5% of AUM)

Transaction cost: depending on the broker, around CHF 10 to 15 per trade

The 15-year Geneva Canton Bond is very similar to the 10-year Swiss Government Bond in many ways:

  • They are both issued by the public authority
  • They are both used to fund public expenditures and investments
  • They are both traded on exchanges thereby ensuring a high degree of liquidity

The key difference lies with the issuer: whereas the former was issued by the Swiss central government, the latter was released by the local authority in Geneva. In reality, as the financial viability of both institutions is fairly stable (as a result of healthy tax revenue and prudent fiscal policies), the creditworthiness of both are fairly high.

One important area to note, however, is that the volume of the canton bond is much less than government bonds (by a factor of 100). This means the volume of canton bond traded will be significantly less than the government one and thus impact on its liquidity.


9-year Roche Holdings corporate bond


Underlying asset overview: lending capital to companies to fuel their operating and capital expenditure programmes

Capital input requirement: CHF 1,000

Yield: 2.375% nominal coupon yield

Capital value fluctuation: usually within +/-10%

Income risks: low

Capital risk: low

Payback period: 9 years

Liquidity: relatively high as the bond is publicly traded

Ongoing management cost: very low (less than 0.5% of AUM)

Transaction cost: depending on the broker, around CHF 10 to 15 per trade

Companies often need capital to grow (e.g. marketing, acquisition). They can achieve this using 2 primary methods: issue shares (rights issue) or issue debt. Shares are cheaper in the short-run because there are no regular coupon payments required. However, they erode the long-term value of existing shareholders through dilution. Bonds are the reverse. They are more expensive to maintain in the short-run but they do not lead to dilution of existing shareholder values. This is why most companies prefer borrowing to issuing more share capital.

This is why Roche Holdings, a Swiss pharmaceutical giant, issued an $850 million 9-year bond in 2016 to make industry acquisitions as well as funding its R&D programmes. With a 2.375% nominal coupon rate and biannual payment frequency, Roche is able to raise capital cheaper and deploy it to more productive areas, thus garnering a higher ROI.


Le Bijou 5-year development bond


Underlying asset overview: lending capital to Le Bijou for the leasing and refurbishment of apartments in prime locations in Switzerland and convert them into short-term luxury accommodations

Capital input requirement: CHF 50,000*

Yield: 5% per year*

Capital value fluctuation: none

Income risks: low

Capital risk: low

Payback period: 5 years

Liquidity: illiquid as the bond is not publicly traded

Ongoing management cost: none

Transaction cost: none

Not only can big corporations issue bonds, but smaller and more agile ones can also do so too; especially in this Age of Technology. In fact, profitable smaller companies can often move a lot faster than large multinationals, thereby reducing the cost of raising capital.

Le Bijou’s development bond* is a prime example where a company pitched a proven business model to investors and achieved successful scale-up. The underlying business operation is remarkably simple: the company either buys or takes out long leases on apartments in prime locations across Switzerland, before converting them into luxury short-stay accommodation. This is an extremely profitable business model fuelled by the popularity of Switzerland as a tourist and business destination. Furthermore, the above-average yield and the collateralization of the property as a security of the loan has proved to be an alluring combination for investors.

* Update: currently this bond issue is sold out. New issues may become available – press “Get Started” to receive updates. P2P lending


Underlying asset overview: pooling capital from individuals in order to lend to private individuals or businesses

Capital input requirement: CHF 10,000

Yield: 5-7% per year

Capital value fluctuation: none

Income risks: medium

Capital risk: medium to high

Payback period: 1-5 years

Liquidity: illiquid as the bond is not publicly traded

Ongoing management cost: none

Transaction cost: none

Traditionally individuals and businesses that require access to capital often had to resort to bank loans, which exerted monopoly on the interest rates and terms. But recent technological advancements, as well as deregulation, now make it possible for private investors to pool funds together in order to lend to eligible businesses and individuals. Platforms like assess the creditworthiness of borrowers and match them with investors with the appropriate risk appetite. The amount of risk undertaken is directly proportional to the rate of interest. Borrowers deemed to be of greater risk are charged a higher interest level.

While this has been an excellent alternative to other fixed-income products, it is not without risks. The two principal risk areas are lack of capital security and liquidity. These loans tend not to be secured (collateralised) against any particular assets. Therefore, in the event of a default, investors need to take bankruptcy proceedings against the individual or businesses, rather than simply claiming ownership of the collateral asset. Furthermore, these bonds are not publicly traded and a viable secondary market is yet to exist, so investors are expected to hold them to maturity.



1. How do I invest in Swiss bonds?

For bonds that are publicly traded, simply go to your stockbroker and outline either your requirement or the exact identity of the bond that you wish to purchase and they should be able to execute the deal for you. For non-public bonds (i.e. real estate bonds, P2P lending), get in touch with the issuer directly and they should be able to advise.


2. How much of my portfolio to allocate to bonds?

It depends entirely on your risk appetite and investment objective. Normally it is recommended to maintain a 60-40 spread between equity and bond in a classic balanced risk pension portfolio. Obviously, investors who seek regular income or greater capital security might increase the allocation for bond; whereas these seeking capital growth might favour equity.


3. What happens when the borrower defaults on the bond?

This depends on whether the bond is secured against any asset or not. If it is, then it’s relatively simple to apply to a court for seizure (repossession) of the asset for liquidation. If it isn’t, then a generic insolvency proceeding against the borrower may commence; in which the court will attempt to isolate and liquidate the assets of the borrower in order to repay the loan.



29. January 2020

High Yield Investments in Switzerland: Returns & Risks Overview

If you could wake up tomorrow in any fantasy location in the world, where would you be? Instead of being crammed like sardines on a filthy bus or train or stuck in an endless traffic jam, maybe you’d choose to have a leisurely breakfast of fresh tropical fruits and go for a swim in the warm crystal clear sea? Your choice. Your rules. Nobody looking over your shoulder telling you what to do. Surely only billionaires can attain such a luxurious lifestyle every day? Think again.

Because today there’s a rapidly growing cohort of ordinary people who thanks to hard graft, entrepreneurialism or savvy investing, have attained a level of affluence which gives them something priceless: financial freedom.

People who have achieved financial freedom have sufficient passive income (generated from assets rather than labour) to meet their daily financial needs. This is typically achieved through investing in assets that generate steady income streams. One of the most popular categories of assets is called high yield investments.

What are high yield investments?

Yield refers to the annual income as a percentage of the capital committed. If you put in $100 into a bank that pays 3% interest per year, then the yield is 3%.

High yield simply refers to assets whose yield is above the market average. There is not a precise universal threshold that distinguishes a high yield asset from a non-high yield one, but normally anything above 7% is considered to be high yield.

The tabulated examples below are intended to provide a clear understanding of the world of high yield investments in Switzerland. It also illustrates the breadth and depth of such assets.

  • Traditional assets
    • High yield bonds
    • High yield equity (stock)
    • Leveraged real estate
    • Private business ownership
  • Alternative assets
    • Crowdfunding projects
    • P2P lending
    • Specialist hedge funds
    • Emerging sectors

Let’s look at each asset class in detail.


1. High yield bonds


Underlying asset overview: lending capital to corporate and governmental borrowers in return for fixed interest payment.

Capital input requirement: CHF 50,000

Yield: 5%+

Capital value fluctuation: can be substantial (+/- 30%) depending on the underlying performance of the bond issuer

Income risks: medium to low

Capital risk: medium to low if held to maturity and the issuer does not default

Payback period: 5+ years

Liquidity: High if the bond is publicly traded, otherwise low

Ongoing management cost: no more than 1% per year

Bonds are debt instruments containing the contractual obligations between borrowers and lenders. It usually contains the following factors:

  • Principal amount (par value) – how much was lent to the borrower by the lender
  • Coupon rate – the interest rate the borrower must pay the lender for the cost of the capital
  • Payment terms – the frequency the coupon will be paid
  • Term length – the duration of the loan of which the principal just be relayed at the end (maturity)
  • Collateral – any asset used by the borrower to secure the loan against

High yield bonds are simply bonds with above-average coupon rates. This can be caused by 2 factors:

  • Inherently high coupon rates
  • High effective coupon rates caused by low par value

Every month, hundreds of companies, municipalities and governments issue bonds to finance their operations leaving investors with myriad choices. The strongest factor that distinguishes one bond from another is the coupon rate. All things being equal, the one with the highest coupon will attract the most investment.

There are 2 key internal drivers behind inherently high coupon rates of a bond:

1. A robust business model capable of producing high cash flow and thus able to afford to pay a premium coupon rate to attract capital.

2. A poorly performing business desperate for capital to ease their short term cash flow requirements, thus forced to pay the premium rate in order to compensate investors for the increased credit risk.

For example, Le Bijou, a network of prime Swiss apartment hotels, issues bonds to investors. The raised funds are used to finance the long-term leasing and refurbishment of apartments in prime central zones in key cities in Switzerland as luxury short-term accommodation. Being a sector that has demonstrated sustained growth and resilience through peaks and troughs, as well as strong underlying fundamentals, this is a robust business model with strong cash flow potential. As a result, it can afford the high-interest rate (ranging from 2% to 5.5% for different issues) to pay investors.

On the other hand, the Argentine government has been running a budget deficit for the past 50 years and defaulted in its sovereign bond 4 times in the past 20 years. As a result, it has a poor credit history and thus when it issued its new round of funding, it needed to persuade investors to entrust it with their capital, by compensating the additional risk they would take on, through high coupon rates.

The second way to achieve high yield is through low par value. Since many of the bonds in issuance are traded on public exchanges (thus highly liquid) and their coupon remains unchanged, a decrease in the par value of the bond would elevate the coupon rate. A bond paying CHF 5 per CHF 100 par value would still pay CHF 5 coupon, even if the par value halves. However, the coupon rate would double from 5% to 10%.

Normally the sudden decrease in par value is caused by material deterioration in the underlying business performance therefore we do not suggest investors touching this category. However, for seasoned and well-informed investors, these can present lucrative opportunities with not only high yield potential but also enormous capital gains.


2. High yield equity


Underlying asset overview: taking partial ownership of publicly traded companies in return for capital appreciation and income

Capital input requirement: CHF ~1,000

Yield: 7-8% – market average return (Swiss Market Index)

Capital value fluctuation: can be substantial (+/- 30%) depending on the underlying performance of the bond issuer

Income risks: medium

Capital risk: medium to high

Payback period: dividends are usually declared and paid out quarterly or biannually

Liquidity: High

Ongoing management cost: no more than 1% per year

Stock options these days potentially offer far more than simply capital appreciation. With increased knowledge about dividend investing, stocks are quickly emerging as an income-generating asset class in their own right; and potentially a high-yield one too.

Historical stock market return in Switzerland until 2017

(source; check recent years on Bloomberg)


Income investors buy high-quality blue-chip stocks partially for their reliable and ever-increasing dividend payment. These companies are hugely profitable and the amount of cash profit often exceeds their ability to sensibly invest it. As a result, they return a portion of that back to shareholders. Thanks to sensible reinvesting the dividend and with the effect of compounding, what started off as a small input could quickly grow into a substantial portfolio as illustrated by the Coca Cola case study.

Most blue chips stocks yield at around 2-4% per year. Anything above that is regarded as high-yield, which is often a result of falling stock price (therefore the amount of dividend as a % of the stock price is increased). Investors going down this route are advised to perform detailed due diligence on the company, its financial health as well as the cause behind the recent fall. It is entirely possible that the decrease in stock price is purely a result of overall irrational negative market sentiment and the price will recover. However, it is equally possible that you are simply catching a falling blade.


3. Leveraged real estate


Underlying asset overview: using a cash deposit and mortgage to purchase properties and then let out on a short or long term basis

Capital input requirement: CHF 50,000 to 100,000

Yield: 5%+

Capital value fluctuation: expected to be relatively stable if invested in the prime areas of in-demand cities

Income risks: low

Capital risk: low

Payback period: 5+ years

Liquidity: low because properties take longer to liquidate

Ongoing management cost: no more than 1% per year

Investors have long favoured real estate as a high yield asset class because of the income stability inherent to properties and the ability to leverage. Properties have intrinsic utilities and values by virtue of their functionality. Furthermore, rental properties provide a fixed and predictable income for the duration of the tenancy. These characteristics also make properties an ideal candidate for collateralisation and thus banks feel comfortable to extend mortgages during purchase.

A mortgage is a form of financial leverage that can amplify return on the equity if the value of the underlying asset rises.


4. Private businesses


Underlying asset overview: purchasing a minority or majority stake in a business and withdrawal of regular dividends.

Capital input requirement: CHF 100,000+

Yield: variable, can be as high (or low) as business performance allows

Capital value fluctuation: can be substantial depending on the trading performance

Income risks: medium to high

Capital risk: high

Payback period: 5+ years

Liquidity: very low

Ongoing management cost: varies from minimal to substantial, depending on the business

It has been documented that more than half of the people who are financially independent are business owners. It is not surprising given that a sustainably profitable business is a valuable asset that could deliver payback for years to come. Being a business owner means you are responsible for charting out your own destiny (and that of others) and the performance will largely depend on your effort, ingenuity and luck. It is very common for successful small business owners to take high six-figure dividends every year and many of these are of largely passive nature once the right management is in place.

Buying a business, especially in unknown geography can be a risky and daunting task, which is why it makes sense to partner up with someone more knowledgeable. In many cases, it is worth ensuring a local partner with expert knowledge and industry connection remains a minority shareholder (most likely the previous owner). This can vastly reduce the learning curve and minimise the risks.


5. Crowdfunding / P2P lending


Underlying asset overview: to provide loan capital funding to businesses or individuals in exchange for interest payments.

Capital input requirement: CHF 1,000

Yield: variable, normally between 5-10% per annum

Capital value fluctuation: none, capital will be returned at the end of the term

Income risks: medium

Capital risk: medium to high

Payback period: 1-3 years

Liquidity: very low

Ongoing management cost: none

Crowdfunding/P2P lending is an old concept where the financing requirement of a company or individual is distributed to the masses. The underlying rationale is that it is far easier to raise $100 from 50 people each putting in $2 rather than trying to get 2 people to commit $50 each. The growth of this asset class has been hugely accelerated in recent years from advances in technology and relaxation in regulations.

Entities that turn towards this source of funding tend to be much less established (and thus higher perceived risk) therefore traditional banks are less willing to service them. As a result, their securities must command a higher yield in order to attract capital and that makes them high-yield instruments.

It is very important to assess the quality of the bond before purchasing as there is always a reason why banks refused them loans in the first place. This can be done through credit checks (which is offered by many platforms). If the borrower is willing to pledge assets as guarantees, it is important to check the value and quality of such assets too in order to determine whether the value of the assets can cover the loan in the event of default.


6. Specialist hedge funds / emerging sectors


Underlying asset overview: a selection of various assets and schemes that are capable of generating high levels of income.

Capital input requirement: CHF 100,000

Yield: variable, normally between 5-15% per annum

Capital value fluctuation: potentially high

Income risks: medium

Capital risk: medium to high

Payback period: 5-20 years

Liquidity: very low

Ongoing management cost: 5%+

This is the most niche asset class and they are sometimes known as alternative assets. They encompass specialist hedge funds that are targeted specifically for high income by investing in high yield bond instruments or distressed debts. There are also schemes which invest in uncommon assets such as freehold leases on land and properties (thus receiving ground rent) and solar panels (by taking a cut of the electricity generated).

These are extremely complex investment schemes which may only be suitable for sophisticated professional investors, due to the high volatility and potential for capital loss. On the other hand, the right product can deliver outstanding returns.

Does high yield equate to high risk?

The orthodox view in finance has always been that high risk equates to high reward. By this logic, in order to achieve high yield, investors must take on excess risk to be compensated. However, the truth is much more nuanced.

Let’s imagine two businesses have just issued crowdfunding bonds at the same coupon rate. Both businesses are less than 2 years old and neither could borrow from banks. Business A is loss-making and has been cautious with capital expenditure on marketing. Business B is also loss-making however it has been investing heavily into its R&D and building up its brand capital. Which one would you invest in?

Business B of course.

It is because any capital injected into Business A is likely to be used for its operating expenditure whereas Business B will use it for capital expenditure. The difference is that the former is used to keep the lights on, whereas the latter is used to improve the underlying performance and strength of the business.

The lesson here is that simply fixating on the coupon yield is insufficient. Investors must dig deeper to understand the underlying reason behind the high yield and gauge the risk accordingly.


Is cryptocurrency a high yield asset?

This is a question we receive over and over again so we’d like to address it directly.

No. Cryptocurrency is simply another means of exchange and by itself is incapable of producing any income (yield). Holding one bitcoin is no different from holding CHF 100 in cash, albeit one is electronic while the other one is physical. Neither will produce any yield.

But investors can profit from crypto by taking advantage of arbitrage in the difference in valuation between crypto and fiat currencies at different points in time; very much in the same way as to how stocks are traded.



29. January 2020

Investing in Swiss stocks: The Neophyte’s Guide

After five years of in-depth research into the lives of assorted millionaires, finance expert Tom Corley looked at his data and saw a clear pattern. The author of “Rich Habits”, had discovered that almost all millionaires had more than one income stream. Most of them had three or more.

Upon further investigation, it was discovered that most of their income was derived from ownership of assets rather than exchanging labour for money. But what kind of assets? Asset ownership includes many different types but two of them dominate. They are:

  • Real estate
  • Equity (also known as stocks – both private and public)

In this article, we will focus on how to successfully invest in Swiss stocks.



What are stocks?

Stocks simply represent ownership in businesses. When you buy 100 Roche shares, you become the legal shareholder of part of Roche. This entitles you to certain rights, for example attending shareholder meetings and voting in key strategic decisions relating to the company.

There are economic benefits to being a shareholder as well: you can receive part of the profit the company makes every year (in the form of a dividend), should the board of the company decide to make a payout. You may also sell your shares at a profit (or loss) to other willing buyers in the open market (making a capital gain or loss).

Lastly, as shareholders participate directly in the economic benefit of a company, they also bear the most risk when it comes to the liquidation of the firm (for example in the event of bankruptcy). It means that any proceeds from the sale of the company will be used to pay off other creditors first before reaching shareholders (if any).


Investing in the best Swiss stocks

With the hundreds of companies listed in exchanges in Zurich and Bern, it can be daunting to decide which stock to include in your portfolio. After all, it’s important to make money, but it’s far more crucial not to lose any! Here we have composed an easy-to-follow guide on how to invest in the best Swiss stocks.

1. Decide how much to invest

There are many theories about the amount of capital you should commit to the stock market. If you ask 10 different professionals, you are likely to get 12 different answers.

Most investment managers would advise their clients by asking them to commit capital they won’t need for the next 5 years or are happy to lose. We think this is suboptimal for 2 reasons:

1. Five-years is way too short a time horizon to be investing in stocks. We are in the midst of a decade-long bull market and the end is still not in sight.

2. Encouraging investors to think about “happily losing money” is not only wrong but also reckless. It is effectively framing investment as quasi-gambling scheme and legitimising the flawed concept that losing money is part of life. In reality, with proper risk control and due diligence, investors with spare cash should expect much more than the unexpected.

Instead, it is better to start by considering the amount of capital that may not be needed in the next 10 years. A decade is a really long time and if you won’t need the funds during that time, chances are you can plan for the long-term.

Then calculate that amount as a percentage of your net worth and think instinctively about whether you are comfortable committing that portion of your wealth in the stock market. This exercise puts the nominal value of the capital into perspective. If you feel uneasy, then reduce the percentage to a level that you are comfortable with.


2. Open a brokerage account

It may sound obvious but your best investment ideas won’t take off unless someone is willing to facilitate and execute the trade. For that, you need a stock brokerage account.

Thankfully as a commodity service, brokerage services are  both plentiful and competitively priced. Chances are, your local bank will offer such a product and a simple online application alongside your proof of identity and address are usually sufficient to open one. Alternatively, there are dedicated stock brokerage  service providers (e.g. Interactive Brokers) that provide no-frill low-cost self-services. They can be an affordable and effective solution for many investors.

Given that you’ll be holding a significant amount of cash in the account at one point or another, it is prudent to ensure that your account is insured with the Swiss deposit insurance scheme in the unlikely event of your broker going out of business.

If you live outside of Switzerland, simply check with your local broker to see if they offer trades in Swiss stocks as most reputable brokers in the EU and the OECD countries do.


3. To manage or to be managed?

There will come a point that every investor will need to confront: do I manage the portfolio myself or shall I outsource to a professional?

There are 3 key ways to manage an investment portfolio and we will explore the pros and cons of each.


Method DIY (or execution-only) Discretionary Management Advisory
Overview You are responsible for all the trading and administrative management of your portfolio. Your broker simply executed your trading instructions. Your broker (or investment manager) has a full mandate to invest your assets at their discretion, subject to the agreed parameters. Your investment manager provides research and advice on areas that are of interest to you. You retain the ultimate trading decision-making and authority.
Ultimate trading authority You Investment manager You
Costs Transaction costs + research cost + your time. Usually should not exceed 0.5% of your total assets per year. At least 1% of your total net asset value per year plus transaction costs Advice is calculated on a time-spent basis, ranging from CHF 150 to 400 per hour.

Transaction and portfolio costs are added on top of that.

Minimum threshold CHF 1,000 CHF 50,000 None but uneconomical if the portfolio is less than approx. CHF 100,000
Knowledge about investment Medium Low High
Time/effort commitment High Low Medium

As you can see, both DIY and the Advisory approach require investors to have a certain level of knowledge about investing and the market. As a result, if you are a complete novice, hiring a professional to manage the portfolio is probably the most appropriate solution.

There are several areas that you should pay attention to when outsourcing to an investment manager:

  • Most investment managers underperform market benchmarks. Even veteran stars can fail that hurdle, sometimes abysmally.
  • Investment fees can have a tremendous drag on performance when compounded over time.
  • Investment managers’ key incentive is to generate fees for themselves. Providing good service and performance is likely to be a byproduct for many of them.

As a result, we highly recommend all investors to educate themselves as quickly as possible and turn to manage their portfolios themselves.


4. DIY: passive vs active

Assuming you’ve decided to forgo the hefty fees and manage the portfolio yourself, you will soon face the question of whether to run it passively or actively.

Passive investing is also known as index investing. It means that instead of attempting to beat market benchmarks (also known as indices), an investor simply tried to replicate its performance and achieve the same level of gains and losses as the indices. Passive investing makes extensive use of index-tracking mutual funds and ETFs.

Active investing, on the other hand, refers to the practice of trying to achieve returns that is over and above market benchmarks (also known as alphas). This strategy usually involves screening, analysing and picking individual stocks to create a diverse but concentrated portfolio which in turn attempts to beat the specific index being tracked.

Comparing active and passive investing:


Key traits Passive Active
Entry threshold Starting from CHF 1,000 Starting from CHF 50,000
Transaction costs Very low, CHF 50 can diversify the portfolio into hundreds of underlying stocks. Slightly higher as each stock needs to be purchased and sold individually, incurring trading charges.
Management costs Low, the Total Expense Ratio (TER) of index funds rarely exceed 0.5% per year. Low to non-existent. Holding individual stocks usually does not incur any costs.
Investment knowledge Low to medium Very high
Number of holdings Hundreds Usually less than 25
Ability to tailor to investment objectives Low High

It is quite evident that unless you possess deep investment knowledge, have superb financial management skills as well as access to a large amount of capital, most investors would be  best served by pursuing the passive route.


5. Passive investing and the common pitfalls

It is very easy to think that once you’ve bought several index funds and ETFs, all is well and you can just sit back and relax. The truth is much more nuanced. There are several common pitfalls that every passive investor should avoid at all costs:

  • Replication error – it sounds obvious  but if your chosen fund cannot accurately replicate the index it is tracking then it is not very useful. Make sure you check the deviation of the fund from the index it is tracking. Anything over 1.5% is unacceptable. You can avoid this by picking a reputable fund provider (e.g. BlackRock).
  • Spiralling costs –  believe it or not, some index funds or ETFs carry pretty hefty costs, like this one. The 0.8% TER is 10 times that of a generic S&P500 index fund and the effect of fees will compound over the years, dragging the performance. As a result, make sure you really understand the objective the fund serves in the portfolio before purchasing and whenever in doubt, just buy a cheap generic all-share index fund/ETF.
  • Forget to rebalance – every portfolio will deviate from the target objective as time passes and it is important to rebalance to ensure it remains on track. Whilst this can be an entire article to itself, the easiest way is to analyse and determine if the asset allocation based on the current value is still in line with the target.  If not, then change it to the desired allocations. Rebalancing should be performed annually on a passive portfolio.


Best-performing Swiss index funds and ETFs


Name iShares MSCI Switzerland Index ETF CurrencyShares Swiss Franc Trust ETF ETFS Physical Swiss Gold Shares ETF First Trust Switzerland Alpha Dex Fund
Index tracked MSCI Switzerland Index (NDDUSZ) Swiss Franc Current market price of the gold bullion NASDAQ AlphaDEX
Overview The iShares MSCI Switzerland ETF seeks to track the investment results of an index composed of Swiss equities.

It gives investors exposure to large and mid-sized companies in CH and enables targeted access to the Swiss stock market.

Designed to track the price of the Swiss franc and is suitable for investors seeking direct exposure to the Swiss franc. The investment objective of the Trust, Symbol: SGOL, is for the Shares to reflect the performance of the price of gold bullion, less the expenses of the Trust’s operations. The Shares are designed for investors who want a cost-effective and convenient way to invest in gold. This exchange-traded fund seeks investment

results that correspond generally to the price and

yield (before the fund’s fees and expenses) of an

equity index called the NASDAQ AlphaDEX®

Switzerland Index.

TER 0.5% 0.4% 0.17% 0.8%
Yield 1.6% N/A N/A 2.2%
Performance (YTD 2019) 10.2% 1.84% 24.8% 13.3%


How to pick your own stocks?

If you’ve decided to venture out solo and believe you have the skills to beat the market, then stock picking is for you. You’ll enjoy an array of freedom and if you could identify the next Amazon (which turned $1 in 1997 into over $1,350 today), then you could be richly rewarded.

Warning: we strongly advise you against investing a large portion of your capital in individual stocks. The evidence says even the most professional investors rarely can beat the market. If you want to try yourself as a money manager, start from safer options like investing in Swiss real estate and always remember to diversify.

There are many different styles depending on your objectives and risk tolerance, however, it can be mainly broken down into 3 categories:

  • Value – identifying and purchasing stocks that are below their inherent market value whilst waiting for the market to realise their true values.
  • Dividend – identifying and buying stocks with an increasing dividend yield in order to maximise the income potential.
  • Adventurous – identifying the next company with exponential revenue and profit potential during its infant stage in order to maximise on capital gains.

Experienced stockpickers usually have set criteria (e.g. market cap, dividend yield, earnings ratios) and they use stock screening tools (screeners) to shortlist candidates. They then perform extremely detailed due diligence based on publicly available investor materials to verify their investment hypothesis, before forming a view. They will then often wait until the stock value has reached an attractive number before making the purchase.


The bottom line

Stock is an extremely attractive asset that can deliver both capital returns and income potential. Equally, Switzerland is home to many of the world-leading businesses. If the appropriate technique is deployed, it forms the bedrock of any sensible portfolio and you’ll be richly rewarded for your effort.

29. January 2020

The Top 5 Ways to Generate Passive Income in Switzerland

Imagine waking up in the morning, not to a buzzing alarm at an ungodly hour, but calmly and naturally to your circadian rhythm.

Then imagine instead of gulping down your breakfast and jumping onto the heaving, sweaty commuter train, you drink your coffee at leisure and take a gentle stroll in the park. Next, rather than working for 10 to 12 hours with colleagues you may or may not like, you take your children to the nursery and watch them play.

To many, this might sound unattainable. But there is today a growing minority of lucky folk who live this lifestyle. Why? Its essentially because they’ve reached financial independence.  This means they no longer have to work and earn a salary to support their lifestyles. Instead, they have passive income streams that are sufficient enough to meet all their daily financial obligations and enable them to enjoy a life of peace and serenity.

passive income


What is passive income?

Income is cash (or cash equivalent) that you receive on a regular and recurring basis. It can normally be divided into 2 distinct categories: active and passive.

Active income requires an active effort to ensure its continuity. This means it can only be generated if you work on it. It is usually in the form of salary but can also include self-employment revenue or active business revenue.

Passive income is the opposite. It is generated with little to low effort. It means that the cash will reach your bank account whether your alarm goes off at 5 AM or not at all. Examples include interest, dividends and rental income. Most of these examples are distributed monthly or quarterly. If the sum of your passive income exceeds your monthly expenditure then hooray! You’ve reached financial independence.

I like using the lawnmower analogy when comparing active and passive income. Imagine that you need to mow your garden lawn. Normally people just buy a manual or petrol mower, wait for the grass to grow, cut it and repeat the process over and over. It’s an active process that requires effort. No work means a snake-infested bush in your back garden. This is a form of active income.

However one day, a genius decided to put in the time, ingenuity and money to create a programmable robotic lawnmower. Suddenly instead of the constant sweat and toil, he had front-loaded all effort and expenditure. Now all he needs to do is to sit back, relax and let the robot do all the hard work. This is passive income.


An overview of the top 5 passive income streams

The quality of a passive income stream is driven by 5 key factors:

  • Ease of establishment – How easy or difficult it is to establish the income stream, both in terms of time and capital investment
  • Yield – This is the amount of income as a percentage of the initial capital/time/input
  • Reliability – Whether the asset generates consistent levels of income or not
  • Maintenance requirements – The level of  ongoing effort required to keep the income level consistent
  • Liquidity – How quickly the underlying asset can be sold without a significant drop in value

With these in mind, we will examine the five most popular passive income assets in Switzerland.


Characteristics/Asset Property (direct) Property (indirect) Equity Fixed income Crowdfunding Business ownership
Overview Rent collection through ownership of real estate. Rent collection on leased properties. Ownership achieved through shareholding in a Special Purpose Vehicle (SPV) Dividend (corporate profit paid to shareholders) collection through purchase the equity of profitable public companies. Interest/coupon payment through ownership of fixed-income assets (e.g. bonds, high-interest saving accounts). Participate in peer-to-peer lending to private individuals or smaller companies and earn interest payments on the loans. Partial/outright ownership of stable and profitable private businesses and derive dividend income from its operations.
Example Direct ownership of an apartment in Central Zurich Le Bijou Owners’ Club UBS Swiss High Dividend Fund CH0127276381 Le Bijou Bonds Crowdhouse Corporate Finance In Europe
Ease of establishment CHF 100,000 minimum CHF 50,000 minimum CHF 1,000 minimum CHF 1,000 minimum CHF 1,000 minimum CHF 100,000 minimum or a lot of sweat and toil
Income level 2-4% yield of the invested capital. Higher if leveraged. 7-14% yield of the invested capital.  1.3-3% of the invested capital 3-5% of the invested capital 5-6% of the invested capital Zero to 100%+ depending on business performance
Frequency Monthly Annually Quarterly/Biannually Quarterly, or Monthly (rare) Monthly Annually
Reliability High High Medium Medium-high Medium-low Depends on business performance
Risk to capital Medium Medium High Medium High Medium-high
Maintenance High Low Low Low Low High
Liquidity Medium Medium High Low Low Low
Leverage Up to 60% of the LTV Up to 60% of the LTV Margin loans can be used although it is extremely risky None None Leveraged loans with strict covenants can be used although it can be risky

As you can see from the comparison above, properties and fixed-income score highly on income level and reliability, with fairly frequent payouts. And our research indicates that many investors would prefer bonds that yield monthly fixed rent. They are even happy to forego high returns offered by the equity in exchange for income stability and reliability.


Are blockchain startups and cryptocurrency passive income opportunities?

This is a question we are getting all the time but right now and for the near future they are definitely not reliable passive income opportunities.

Blockchain is simply a method of recording and encrypting data entries securely. Cryptocurrency, on the other hand, is a form of digital currency that is used as a form of value exchange, powered by the principles of blockchain. As a result, neither can yield a fixed income stream for investors; so for the moment they certainly aren’t passive income opportunities.

However, there have been plenty of individuals who have profited from cryptocurrency speculations and who then converted the profits into the assets outlined above and subsequently acquired stable passive income streams.

passive income


All streams lead to the vast Ocean

It has been said that the average millionaire has at least 7 independent income streams. But they cannot be working 7 jobs simultaneously as otherwise, they wouldn’t be millionaires, so usually most or all of these streams are of passive or semi-passive nature. Ultimately, passive income is the only sure way to achieve long-term wealth and live a life of tranquillity.

Excited? Time to start generating passive income!


28. January 2020

Fixed-income investments in Switzerland: Overview, Risks & Benefits

What do you get when you make a substantial investment that rewards with a reliable income you can depend on every quarter? Fixed income (FI) of course. But which classes of this asset are best for you and why?


What are fixed-income assets?

As the name implies, fixed-income assets generate a preset amount of income at regular intervals. Just like a bank deposit you pay in a certain amount for a predetermined period at an agreed rate. The bank then credits the equivalent interest every month.

Broadly speaking, fixed income usually refers to debt assets (i.e. investor lending capital) as opposed to equity assets (i.e. investor exchanging capital for ownership). Investors become creditors to the entity that they invest in. In exchange, they are compensated by regular coupon/interest payments at an agreed rate.

Below is a list of common fixed-income assets:


Fixed income asset Description
Bank deposit Savers lend money to banks (deposit) in exchange for interest payment. The capital is usually protected up to a certain amount (i.e. CHF 100,000 in Switzerland), guaranteed by government-backed insurance schemes.
Government bonds  


Investors lend money to another entity (be it national governments, municipal governments or corporate entities), in exchange for coupon payment.

Municipal bonds
Corporate bonds
Property bonds Investors lend money to a corporate entity that owns properties, in exchange for coupon payment. The loan is often secured against the underlying property (collateral).
Mini-bonds Investors lend money to SMEs (small and medium enterprises) in exchange for coupon payments. It’s similar to corporate bonds however the debtor in question tends to be smaller and higher risk. The coupon rate is usually significantly higher than corporate bonds.

Why invest in fixed-income assets?

Most investors dedicate a significant portion of their portfolio to fixed-income assets, especially pensioners and those close to retirement age. There are 3 key reasons behind such a move:

1. Income regularity – investors receive a fixed level of income at a regular interval (hence the name!)

2. Lower capital volatility – as a fixed income investor, you are a creditor to the investee (rather the owner of). Consequently, in the event of bankruptcy, you will recover your capital before shareholders (although as we’ll see later, this can be deceptive).

3. Securitisation and diversification – fixed-income assets can be securitised and be traded like stocks, achieving liquidity and help to increase diversification (through lower transaction costs).

How to choose profitable fixed-income opportunities?

Like any other investment, the core of a profitable FI asset is the balance between the risk taken on and the reward it generates (risk-reward profile).

There are 2 principles ways to reap the return from FI assets:

  • Yield: the fixed coupon/interest payment as stipulated under the terms of the asset.
  • Capital price movement: when the underlying par value of the asset changes from the original issuance value. This only really happens with publicly traded bonds.

Equally, there are several intrinsic and extrinsic risks associated with these assets:

  • Credit risk: where the issuer defaults and fails to return interest and/or capital.
  • Pricing risk: where the selling price of the security is lower than the purchase price.
  • Interest risk: where a rise in the central bank base rate renders the security a less attractive investment option, reducing the price.
  • Inflation risk: where the rate of inflation outpaces the coupon rate, decreasing the purchasing power of the capital.
  • Liquidity risk: how easily an asset can be sold and turned into cash.

The key is, therefore, to ensure for a given level of risk taken on, you are maximising the return.

A glimpse into the most profitable fixed-income assets in Switzerland today

The most common fixed-income assets available to retail investors these days are:

  • Government bonds
  • Corporate bonds
  • Property bonds
  • Mini-bonds

Each asset has different characteristics and understanding their risk-reward profile is critical in deciding how to deploy them in the portfolio.


Asset Government bonds Corporate bonds Property bonds Mini-bonds
Description Debt instruments issued by local/national governments to fund their spendings. Debt instruments issued by companies (usually large and public ones) to fund their operations and growth. Debt instruments issued by an SPV (usually a limited company) to fund the purchase of properties. Debt instruments issued by small private companies (or even individuals) to fund their business operations and growth.
Yield Usually between 0.5-2% for Gilts and Treasury Bills, -0.3% for Swiss government bonds 2-4% for investment-grade bonds 3-7% 8%+
Capital appreciation Limited to 1-2% per year for AAA-rated countries. None if bought at issuance and held to maturity. 2-3% per year. None if bought at issuance and held to maturity. Not publicly traded. Full repayment if held to maturity. Not publicly traded. Full repayment if held to maturity.
Credit risk Low – if a default occurs, governments can always just print more money. Medium – default can happen and bondholders need to go through lengthy legal processes to liquidate assets (if any) and recoup losses. Low – bond is secured against the property, which can be liquidated relatively quickly (compared to corporate bonds). High – default will go through a similar process as corporate bonds. However, these companies tend to be smaller and less stable.
Pricing risk Low to medium – short term fluctuation is inevitable. Low to high – depending on the trading performance of the specific company in question. None, the instrument is not publicly traded. None, the instrument is not publicly traded
Interest risk High – any interest rate increase will dampen the par value. High – any interest rate increase will dampen the par value. None, the instrument is not publicly traded None, the instrument is not publicly traded
Inflation risk High – due to the low yield. Medium to high Low – as yield is above the historical average CPI. Low – as yield is above the historical average CPI.
Liquidity risk Low – the government bond is vibrant and highly liquid. Low – unless a company Is undergoing financial distress. High – instrument not publicly traded. High – instrument not publicly traded.
Examples CH government 10-year bonds Novartis bonds Le Bijou property bonds (certain issues) UK Renewable Energy Bonds

It is evident from the above comparison that at one end of the risk-reward spectrum, we have government bonds that are extremely stable and yet delivering below-inflation returns. On the other hand, we have minibonds issued by SMEs that provide a superior return, but investors might not recoup their capital!

Corporate and property bonds rest somewhere in the middle of the two ends. They both have a similar overall return profile (5-6% per annum). The question, therefore, boils down to liquidity versus credit risk:

  • Corporate bonds are highly liquid instruments and can be easily sold over the counter. However, it requires investors to understand the underlying performance of the business in order to gauge the credit risk. Equally, when a default occurs, the process of recouping the capital can be lengthy, onerous and uncertain.
  • Property bonds are highly illiquid instruments (since not publicly traded) and require holding until maturity. However, their principal risk lies in the valuation trend of the specific property it is collateralised against, which is easier to understand. Equally, once default occurs, bondholders can simply sell the property and be compensated, which is a simpler and faster process than corporate debt restructuring.

In conclusion

There’s a huge array of different fixed-income assets to choose from, so choosing the one that suits your potential outlay and profile is key.  Corporate and property bonds are the most profitable assets. The key trade-off between them lies between the liquidity risk versus liquidation risk. The bottom line though is that property bonds tend to deliver higher returns in the long run. As well as offering better protection against default. However, one must accept the lower liquidity inherent to the asset.

5. January 2020

Samsung and Le Bijou cook up fantasy apartment-hotel

Imagine you could have the best of both worlds: the style, comfort and services of a luxury hotel; combined with the privacy, home comforts and extra functionality that renting an apartment brings. Until recently you would be relying on your imagination, but today in Switzerland, dreams are turning into reality and the apartment of the future has landed.


Finally, thanks to apartment-hotel innovators such as Le Bijou and smart, high-end home appliances made by Samsung, guests no longer have to compromise. They can have their cake and eat it. Quite literally. A hotel-speed digital butler service is there for your deliveries or collections; ensuring you have all the privacy you need along with the relaxing feeling that you’re as safe and snug as you would be at home. And thanks to Samsung home appliances based on smart technology, you can cook, entertain and clean your clothes at the same time. All with intuitive or voice commanded controls and silent appliances that even your dog would have trouble hearing.



Speaking from one of their sumptuously furnished apartment-hotels in Zurich, Le Bijou CEO Alexander Huebner, says that choosing Samsung appliances for their apartments was a key decision. “Our guests want to feel like they are at home, so somewhere safe and private with no unnecessary interruptions or interferences. But they also value home comforts; so being able to cook your own food with guests for a dinner party example; its something not usually possible in hotels. Integrating high-end Samsung appliances into the heart of our apartment allows us to offer such opportunities.”



We glance around the apartment, but where is all this technology? They are difficult to spot at first, as they blend seamlessly with the clean alpine lines of the fixtures and fittings, but after a few seconds scouring the spacious apartment, we manage to spot a mini stove, a dishwasher and a washing machine. All made by Samsung.

“James turn on the washing machine please,” Huebner says calmly to Le Bijou’s Alexa-style voice-activated digital butler service, as we anticipate the sound of a washing machine jolting into action. But we hear nothing, and I presume James, which is the custom name given to the digital service, hasn’t heard Huebner’s laidback command. “No, it is working,” Huebner continues, “but they are just so quiet. Get closer, really close. Only then can you hear it”. Pointing to the various fitted appliances in the swish apartment the Bijou CEO continued, “it’s this kind of invisible technology that impressed us and what our clients love. Technology that doesn’t get in the way but operates quietly in the background and can be easily controlled”.

Stepping out onto the terrace as the sun begins to go down we marvel at the stunning view of Zurich’s famous Paradeplatz square and the gothic splendour of Fraumünster Church. We’ve moved to unit MH6 – Le Bijou’s award-winning apartment in downtown Zürich, and we’re hungry.


living room

Noticing his guests are looking peckish Huebner reassures us, “Don’t worry, we wouldn’t dream of not providing our guests with a delicious snack after trekking across Zurich,” the Swissman says as he pulls out his phone. “James, we’d like to have some cakes heated in our oven please,” Huebner commands.



Apparently the digital butler James is Uber-like in that the nearest member of Le Bijou`s digital butler service would`ve got the message and delivered the cakes to our oven. So all that was left for Huebner to do, was command the Samsung oven to heat them up. By now we are rather more than peckish so as the dusk turns to twilight we scurry back into the apartment to be greeted by the distinctive sweet fragrance of freshly baked sweetbread. “Your cake is ready sir” says James through the speaker as we sit on plump cushions arranged around a low coffee table of what looks like black mahogany. “Would you like some jam with that?” Huebner says holding a platter of steaming hot cupcakes accompanied with small bowls of condiments infused with alpine fruits and herbs.


new technology

Invisible technology by Samsung

The ability to control the Samsung stove from outside the kitchen, or indeed anywhere apparently, was impressive and would certainly be very convenient to travellers who want to maximise their time during their brief stay. But I was keen to know more about this new technology and how all the devices could be controlled like this. So we say our goodbyes, and at Huebner’s insistence, carry away the last cupcakes in our satchel and head off for an evening stroll along the delightful Bahnhofstrasse street.



The next day we called on Samsung in Zurich to find out a bit more about the technology being used in Le Bijou’s apartments.“The Samsung devices in Le Bijou’s apartments can all be centrally controlled by SmartThings”, said Fabian Schenkel product manager at Samsung, “This app connects all home appliances so users can manage their homes over their smartphone – any time, from everywhere”.

We asked Fabian Schenkel what’s coming next from the South Korean electronics maker. “Soon, with Samsung Smart Hub, you will also be available to control other non-Samsung products including devices such as smoke detectors, motion sensors, water sensors, temperature sensors, air conditioners, doorbells, locks and many others,” Fabian explained.

We’re not at a panacea moment yet. Technology is ever-changing and there will be even more improvements and changes in future, but right now is there a better example in the world of the dream apartment-hotel? Not one I can think of anyway, and looking at Le- Bijou’s reviews on their website, one particular guests’ response sums up just how impressive the combination of Samsung technology and Le Bijou’s luxury hospitality is.


stewe wozniak

“Le Bijou is the most elegant, personalized, exclusive hotel in the world” – That’s according to Apple co founder Steve Wozniak, someone who I imagine, is rather fussy about technology and the development of the very best products and services, in any field.



Authors: Tina Baumberger, Fabian Schenkel, Yaro Nichiporets

3. November 2019

Firing On All Four Cylinders: Le Bijou Unleashes the SL2

The Secret’s Out: Le Bijou Unleashes the SL2 in Lucerne

It’s one of Europe’s hidden treasures and a place so delightful that enchanted tourists never want to leave. But today, the impossibly beautiful city of Lucerne is also attracting a new type of visitor. That’s because with the global economy stuttering, discerning investors are now flocking to one of Europe’s most trusted assets: Swiss bricks and mortar.

Now more popular than Venice, according to a recent report in news broadsheet Neue Zürcher Zeitung (NZZ), Lucerne is hard to beat as a destination for your cash in Switzerland this year. But if you’ve had your eye on the market, you’ll know the very best deals seldom pop up on the market. Although there are plenty of good pickings, investors who prefer cherries on their cake need a dash of patience and some fleet of foot to snatch the most prestigious deals.

The SL2 Lucerne Owners Club 

Zoom into view Le Bijou’s exceptional SL2 apartment-hotel complex in Lucerne – featuring four prestige, self-contained lakeshore units smack in the middle of the charming old town. And a unique opportunity to grab a stake in one of the Swiss apartment-hotel innovators’ sought-after property-share deals – which include some nifty perks on top of a healthy slice of the superb yields these sublime apartments generate.

Register to know more about SL2 Owners Club


Proven Track Record

Since opening in 2017 Le Bijou’s SL2 units in Lucerne have become the go-to venue in the city for corporate and media marketing events as well as for upscale tourists who want to experience the very best in Swiss comfort and hospitality. Featuring a market-leading occupancy rate of approaching 90%, the four units combined rake-in up to 2‘800 CHF per day.

With a 9.2/10 rating on the SL2 units are literally in a class of their own, as the feedback resoundingly proves:

“The penthouse was stylish, in a very convenient location and has beautiful views of the lake and the wow factor. Day and night views from the apartment were magnificent. Appliances supplied were of high quality and include nice touches such as the Sonos system. Would definitely recommend to friends and family.”

Amanda, October 2019

Hitting exactly what the market needs

Although tourism is undoubtedly on the rise in this fairytale alpine town, and new hotels appear to open almost every month, SL2’s four apartments enjoy numerous advantages which make them stand out in what is still a rapidly evolving market.

Key to the success is the innovative business model pioneered by the Swiss hospitality developer, which aims to satisfy a new and rapidly-growing cohort of customers who are dissatisfied with the usual offerings from traditional hospitality providers.

Inside and out the SL2 units are built for a new kind of highly sophisticated traveler, who wants:

1. All the privacy advantages an apartment can provide

2. All the high-end door-to-door VIP services of a 5 star hotels

3. Downtown location with best panoramic views

4. Cutting-edge technology and luxurious, tasteful design

When you’re in a Le Bijou unit, you have the whole place just for yourself. Such comfort seduces frequent clients of five star hotels, even the royals.

Growing Market

Nestled on the shores of Lake Lucerne, dramatically encircled with majestic mountains, it is hardly surprising that tourism in the city is flourishing.


According to the Swiss Tourism Office, Lucerne in 2018 hosted 10% more American visitors and 11% more guests from Asia, compared to the previous year. Overall last year Switzerland’s tourist numbers swelled by 3.8% – hitting a record 38.8 million overnight annual stays.



• Year after year, ever since 1982, Switzerland has witnessed an increase in tourism, unaffected by global crises

• Ranked first on the Global Peace Index (GPI)

• Stable political and economic outlook

• Low interest rates and mature financial markets



• A staggering nine million tourists visit Lucerne every year

• By 2030 Lucerne will host 12-14 million tourists per year (According to research undertaken by Lucerne University)

• Increasing demand for high-quality tourist accommodation and according to the Lucerne Tourism Office, a 90% occupancy rate in high-season


Profitable Segment

Lots of tourists, yes, but these days they are spoiled for choice and increasingly picky about where they stay. Visitors to Switzerland are sophisticated and demanding. So the SL2 units were made to exceed even the loftiest of expectations.

Le Bijou’s SL2 property caters to a growing segment of artisan travelers, unruffled by the cooling global economy; and while not wanting to be ostentatious or flashy they do still want the full flush of VIP butler services; usually only found in the very best hotels.

This new breed of discerning traveler demands the most convenient and most private location. Somewhere with the very nicest views too. No compromises. They want all these things combined and they want it delivered in a polished, professional and highly personalised way.


The SL2 Building

A short stroll from the glorious 8th Century Church of St. Leodegar, SL2’s lakeside units take up a whole floor of a converted 19th century building not far from the medieval Chapel Bridge and Water Tower.

Each of the four apartments was built with privacy in mind and made to exceed the highest benchmarks in Swiss design and construction.

Together, the SL2 units can cater for up to 150 event guests and each apartment is fully equipped with a kitchen, two bathrooms and sleeping accommodation for up to eight visitors.

All the units provide fantastic views over the city or the surrounding mountains and lake. And Le Bijou’s management team and digital butler silver service are always at hand. With tailored apartment services and ready advice on where to experience the local culture and fine dining.

In high-demand from well-heeled locals and globetrotters alike, the residences’ provide unrivalled levels of comfort, all wrapped up in Le Bijou’s unique signature style of timeless elegance and Swiss attention to detail.


Strategic Location

• Arguably the best location in the whole city – with unparalleled views of the cityscape, mountains and lake

• The property is one of only a dozen buildings located in the strategic heart of the city that can offer the above and also be capable of serving as a hotel


An Opportunity to Diversify Your Portfolio

• The fundamental principle of diversification is that owning several low-correlated investments with the same returns decreases risk, while the returns stay the same. As shown by Ray Dalio, one of the world’s most successful fund managers, owning 10 uncorrelated assets will improve your return to risk ratio by a factor of 5.

• When compared to Zurich, Lucerne has a much more touristy clientele. The property generates healthy returns and has low correlation with the profits of our LG23 property in Zurich, what makes it a good fit for diversification.


         • For Zurich properties think business travelers, brand events and family celebrations

         • For Lucerne properties think tourists, tourists tourists!


The Upcoming Improvement

The SL2 units are already functioning excellently but there is always room for improvement. For 2020, the following improvements and goals are planned:

• Installation of James, the AI butler

• Content marketing media campaigns and behavioural-targeted online ads

• An increase in event bookings

• Minor renovations of some areas needing renewal


The Scoop

Savvy investors tempted to make a pre-Christmas splurge can now hoover-up the many exciting benefits that the SL2 Lucerne Owners Club offering provides.

While shares last, investors are being invited to choose from a menu of custom investment kits that include several tiers of leverage.

Typically based on a 10-year franchise and lease, the shares provide safe, healthy, tax-free annual dividends of 7-14%, as well as the opportunity to actively participate in the success of a trend-setting business transforming the industry.

And if that wasn’t tempting enough, SL2 Lucerne Owners Club members also receive generous member-only privileges such as significantly reduced rates on hosting friends and family for special occasions.



Cherries for Christmas

Want some more cherries later on? Owners Club investors will also get preferential access to exclusive new investment opportunities as and when they arise, along with investor and expert insights exclusively available through the club platform.

So whether you are thinking of diversifying your portfolio, or looking for an opening in an exciting new market segment; in the last weeks of the year there is likely no better way of becoming a player in the 5-star hospitality industry.

Just days since the offering 40% of the shares are already reserved but for nimble investors there should still be just enough time to grab a remaining holding in one of the smartest and most rewarding real estate deals in Europe this year.


For investors

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Update: unfortunately, all A-shares are sold out; although we may have a couple of other properties and investment options available, such as 6% development bonds and B-shares.



29. October 2019

Survey results: Why do Swiss investors favor Swiss properties so much?

People often associate Switzerland with Alpine skiing, private banks and fondue. What many don’t realize is that Switzerland is also a strong investment market for real estate.

We regularly speak with our investors face to face and on investor events. While most of them are aware of the benefits of global diversification, they keep a half or more of their investments in Switzerland and prefer it that way.

We asked why, and here are the five reasons why Swiss investors are reluctant to put their money elsewhere.

1. Investors like political neutrality

Let’s face it. Wars are bad for wealth preservation (for most people). That’s why the fewer wars you fight, the more stable your society tends to be and the wealthier it becomes.

Switzerland has been a neutral nation for the past few centuries. This means that instead of focusing its energy fighting on battlefields, the nation has directed its efforts towards fostering its development and wellbeing.

As a result of its politically neutral stance, the country is considered to be one of the safest places for storing and growing wealth.

swiss city

2. No financial roller-coaster

Switzerland’s conservative policies keep the country on track for consistent growth. Yes, you won’t see big economy upswings (one might call them bubbles), but you also won’t see the downside: severe, prolonged recessions.

For example, Switzerland’s government debt-to-GDP ratio has never been higher than 48.9%, and in fact, stood at only 27.7% last year. In comparison, the government debt-to-GDP ratio in the United States is over 100%.

Switzerland Government debt-to-GDP ratio, 1980 - 2019Switzerland Government debt-to-GDP ratio, 1980 – 2019

united states gross federal debt to gdp
US government debt-to-GDP ratio, 1980 – 2019

Historically, Swiss economy showed great resilience to global financial crashes. In particular, Swiss real estate.

The correlation between total returns from Swiss real estate investments and from global real estate investments was very weak: only 0.1 between 2002 and 2016 [12]. Such independence makes Swiss real estate a great asset for portfolio diversification.

Development of total returns from real estate investments held by institutional investors in Switzerland, Germany, and on a global basis

  Development of total returns from real estate investments held by institutional investors in Switzerland, Germany, and on a global basis

Sources: PMA, IAZI, Credit Suisse; last data point: end of 2017 [4]

switzerland tourist arrivals

Tourist Arrivals in Switzerland were almost untouched by global recessions in 2000 and 2008

Switzerland can also boast unparalleled stability in its economy, and for many investors, economic stability outweighs any opportunities for growth that areclouded with potential risks. This is unlike the growth rates seen in the U.S. and Asia, where upswings in growth rates are followed by a recession, something that hits economies financed primarily by debt especially hard.

3. Strong rule of law

Switzerland has an independent judiciary that is not controlled by the nation’s government. This fact fundamentally enshrines private property rights. As a result, investors can be  confident that when they place funds in the country, they know that their assets are protected and cannot be arbitrarily expropriated.

4. Stable and diverse property market

Switzerland boasts a diverse property market that offers everything from residential to commercial and industrial. There are no restrictions against foreign investment in real estate, which means that even as an outsider, you can easily participate in the country’s property market whether in a personal capacity or through a corporation.

The Swiss real estate market is also one of the most stable property markets in the world. That’s why, for instance, when the Great Recession hit, it merely made a blip on the pricing index, before returning to its historical growth rate.

swiss view

5. A well-developed banking system

Swiss bankers are famous for their discretion and sophistication. Centuries of socio-economic stability have made it the financial safe-haven of Europe (and the world). As a result, Switzerland has one of the most sophisticated financial industries in the world, with CHF 7,300 billion in assets under management.

Swiss banks are also not afraid of lending to non-Swiss nationals. As a result, it is easy to obtain financing for property investments and the choices can be pretty wide-ranging and attractive.


[1] Switzerland Tourist Arrivals

[2] Switzerland Government Debt to GDP

[3] United States Gross Federal Debt to GDP

[4] International real estate investments with potential

5. November 2018

Le Bijou on the cover of Swiss Enterpreneurs Magazine

Le Bijou is revolutionizing travel by transforming prime-location residential apartments into the hotel experience of the future.

Madeleine Fallegger, Co-Founder of Le Bijou in an interview with the Swiss Entrepreneurs Magazine.

In real estate, “Bijou” is used to describe a race and precious property. In turn, Le Bijou selects the very best apartments and furnishes them in accordance to Swiss contemporary design, providing the service and look of a premium hotel.
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26. October 2018

Tagesanzeiger about apartments in Zurich

Tagesanzeiger mentions the Le Bijou Apartments

In an article “Airbnb für Zureich” the Tagesanzeiger also mentions the apartments of Le Bijou. Here are excerpts from the part of the article related to Le Bijou:
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