The Democratic victory in the United States midterm elections produced only a brief dip in market sentiment. Across Asia, Europe and the United States, equity losses were quickly recovered and the Swiss Market Index (SMI) reached a new all‑time high. While a "buy the dip" approach proved effective, the dollar lost ground, making overseas investments less attractive for Swiss investors.
A softer dollar, combined with AI‑related risks on US equities, elevated valuations and ongoing geopolitical uncertainty, leads to a recommendation for a stronger allocation to defensive Swiss assets. Swiss companies are not immune to a weaker dollar because a strong franc can compress earnings, but analysts expect US market volatility to remain higher than Swiss market volatility over the next two years, extending to the end of former President Donald Trump's term.
Dividend‑focused exchange‑traded funds remain a core portfolio component. The iShares Swiss Dividend ETF tracks the SPI Select Dividend 20 Index, which selects the 20 highest‑yielding Swiss stocks with stable dividend histories and solid profitability. Weightings are based on free‑float market capitalisation and normalised dividend yield, with a quarterly cap of 15 % per security. The index is reviewed annually in March.
The six largest constituents of the index are Zurich Insurance and Roche (each 15 % weight), Nestlé and Novartis (each 14 % weight), Swiss Re and Holcim (each 10 % weight). Over the past 20 years, total returns that reinvest dividends have delivered an annualised 5.8 % for the Swiss Performance Index (SPI), 5.9 % for the SMI and 6.1 % for the Swiss Leaders Index (SLI). Bloomberg data show that dividends account for two‑thirds of the SMI’s performance and one‑third of price gains, while for the SLI dividends contribute 60 % of total return. At the individual stock level, Zurich Insurance derives more than 82 % of its return from dividends, Swiss Re 86 %, Nestlé 66 % and Novartis 63 %.
Beyond the ETFs, analysts advise investors to concentrate on high‑quality dividend issuers and avoid companies with high debt levels or payout ratios near 100 %. Companies flagged for concerns include Sunrise (elevated debt), Mobilezone (still completing restructuring), Partners Group (uncertain future dividend growth), APG (minimal revenue and earnings growth) and Cembra (higher‑than‑expected credit risk per UBS analysts).
Companies cited as attractive dividend candidates feature Zurich Insurance (dividend yield 4.9 %), Züblin (4.8 %), Phoenix Mecano (4.5 %), BB Biotech (4.3 %), VP Bank (4.3 %), Swiss Re (4.1 %), Valiant and Zurich Airport (each 4.0 %).
Raiffeisen’s chief investment officer Matthias Geissbühler maintains a defensive stance, favouring the Swiss market while keeping the United States, Europe and emerging markets slightly under‑weight. He continues to overweight Swiss real‑estate funds and gold for diversification and holds a higher cash allocation to capture opportunistic entry points.
Investors are cautioned not to be swayed by the recent rise in US stock prices. Uncertainty surrounding the midterms has receded, but market participants remain under‑weight in US equities, leaving room for further upside, particularly in technology stocks that could benefit from reduced capital spending on data‑centre projects. Seasonal factors, such as the typical Christmas rally beginning mid‑November, may also lift US equity prices, but the guidance stresses focusing on a long‑term portfolio built around Swiss dividend equities rather than short‑term US market moves.
