Finance Center | 31 May, 2017

Switzerland: diversifying across borders

Miguel Rodríguez Canfranc

Diversification is understood as the process whereby we invest in more than one asset in order to reduce portfolio risk. The lower the correlation between the assets comprising a portfolio, the higher its diversification and the lower the risk associated to it.

Diversification can be attained, for example, by investing in different assets (shares, bonds, etc.), currencies (euro, dollar) or geographical regions (developed markets, EMs…).  There is, however, a type of diversification that enables us to maximise the yield-risk ratio: Investment across borders, in other jurisdictions.

Allocating part of one’s savings to investment in a jurisdiction other than one’s country of origin offers the advantage that said savings will not be affected by local political events, local market fluctuations, economic cycles, the trend in local currency or local financial institutions.

Many savers worldwide opt for this means of diversifying their wealth and place part of their capital in international financial centres, like Switzerland, for instance.

Switzerland is an international financial centre offering a series of advantages vis-à-vis diversifying wealth:

  • It is a country that is legally, politically and economically stable.
  • It gives access to a wide range of currencies, including the Swiss franc.
  • It enables access to international investment opportunities.
  • It has a sound range of credit products offering attractive conditions.
  • It has strong, strictly regulated financial institutions with sound footings.
  • It is a country with constant supervision, controls and monitoring.
  • It upholds the highest confidentiality and privacy standards.

And, above all, Switzerland can boast very many years’ experience in wealth management, making it one of the favourite destination countries for savers who, for one reason or another, wish to diversify their portfolio by housing part of their wealth in a jurisdiction other than their own.