Just under half of Swiss investors hold the majority of their assets in Swiss franc-denominated investments. Due to the structure of the Swiss stock market and the home bias in pension fund assets, experts advise Swiss investors to diversify their freely investable assets more broadly.

Swiss investors are torn between a traditional preference for Swiss investments and the growing trend toward international diversification. Compared to the diversification trend in Europe, the so-called “home bias”—that is, the focus on familiar domestic securities or investments denominated in Swiss francs—is particularly pronounced in Switzerland. This is shown by the Swiss results of the “Be-Invested” survey, conducted on behalf of Fidelity International among 13,000 retail investors in Europe and the Asia-Pacific region, including 500 investors in Switzerland.

The survey shows that nearly half of Swiss investors heavily focus their investments on the domestic market: 33% hold at least 75% of their investments in Swiss francs, and another 16% hold a large portion. In contrast, about 40% invest less than half of their assets in Swiss francs, indicating significant international diversification.

Younger Investors Are More Diversified

Younger Swiss investors aged 18 to 34 focus significantly less on domestic investments. Only 27% hold predominantly Swiss franc-denominated investments, while more than a quarter invest less than 25% of their portfolio in such assets. The survey also found that younger investors are generally open to investing. This reflects the broader European trend, with more than two-thirds of younger investors planning to invest more. In contrast, Swiss investors aged 55 and older continue to focus heavily on the domestic market. Nearly half (47%) hold the majority of their investments in Swiss francs.

Among Swiss investors who are already internationally diversified, the reasoning largely aligns with the attitudes observed across Europe. Of those who hold less than 50% of their assets in Swiss francs, just under two-thirds (64%) state that investments outside Switzerland and in foreign currencies are important, including 25% who describe them as very important.

The Swiss investor market is undergoing change

Overall, the results point to a market in transition. While domestic investments continue to dominate the investment landscape among older investors in Switzerland, younger investors are increasingly looking beyond the country’s borders, suggesting a gradual shift toward globally diversified portfolios. “Traditionally, many Swiss investors have placed too much emphasis on domestic investments,” comments Pascal Schuler, Head of Sales Switzerland at Fidelity International. He continues: “Diversification is the only ‘free lunch,’ as Nobel laureate Harry Markowitz noted in his Modern Portfolio Theory in the 1990s. The performance of the Swiss franc over the past decades, a stable political environment, and innovative, market-leading companies can be cited as a success story and as key factors behind this concentration on domestic assets.”

Most of the funds in the second pillar are invested in Swiss assets

Investors should nevertheless be aware that structural characteristics of the Swiss market can influence a portfolio’s long-term returns and resilience, Schuler continues: “For example, an excessive focus on Switzerland results in an overweighting of defensive sectors such as healthcare or consumer staples, but also in the neglect of global growth sectors such as technology. This picture becomes even more pronounced when, in addition to private wealth, one includes the funds of Swiss pension foundations, which account for a significant portion of Swiss private investors’ assets. Regulatory requirements also mean that a large portion of second-pillar funds is invested in Swiss assets.”

In Schuler’s view, Swiss investors should therefore question the rationale behind the geographic allocation of their freely disposable assets: “The high proportion of Swiss stocks, bonds, and real estate in portfolios is out of proportion to Switzerland’s gross domestic product, which accounts for only about 0.85% of global economic output. This also holds true when considering the share of total Swiss stock market capitalization relative to the Global MSCI World IMI, which stands at around 2%.”

Don’t Let Patriotism Lead You to Neglect Diversification

Even though there are some arguments in favor of Swiss investments, Schuler warns that patriotism should not lead to neglecting diversification and unwittingly exposing oneself to concentration risks. “As a global asset manager in particular, we offer a holistic portfolio of solutions that are promising across various market scenarios and help investors allocate their assets globally,” Schuler concluded.