Investing in Swiss dividends and beating market indices
Financial products
Posted by MoneyController on 16.11.2023
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Many investors like dividend-paying stocks because they guarantee a steady cash flow in the portfolio. Their performance can also be better than some other stock market indices, as the example of a Swiss investment fund shows.
The portal "Das Investment" (the article is signed by Sven Stoll) dedicated an article to Z-Capital Swiss Dividend, a fund investing in Swiss companies that pay dividends. As we read in "Das Investment", this fund can boast of significantly outperforming some market indices: over a ten-year period, it has outperformed the Swiss Stock Exchange Performance Index (SPI) by an average of 10% per year, even better than the FWW sector equity fund All Cap Switzerland, which has outperformed the SPI by an average of 8.3%.
The strategy of the fund, which is managed by Pascal Seidner, is to invest in a combination of Swiss companies that have been paying dividends for a long time and similar Swiss companies that are more focused on dividend growth. In terms of the size of the companies in the portfolio, this means that about half of the investments are made in the largest capitalisation companies (Novartis, Roche, Nestlé, etc.) and half in medium-sized companies that are among the most interesting in their sector.
Investing in dividend-paying stocks is a popular option for many investors who look forward to the possibility of receiving a stable stream of income, which can be a sign of a company's good financial health. On the other hand, the risks of investing in dividend-paying companies should not be underestimated: firstly, there is a risk that the level of dividends may be reduced due to the financial needs of the company; secondly, the payment of dividends may result in a failure to reinvest profits effectively, thereby limiting the development of the company's business over time.
Returning to the Z-Capital Swiss Dividend fund, as we continue to read in "Das Investment", Seidner explains that its investment strategy includes the exclusion of companies with high levels of debt. As we continue to read in "Das Investment", Seidner is somewhat pessimistic about the stock market's performance in the short term, both because of the economic slowdown in Europe and the persistence of interest rates.
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