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Swiss equities

Context The Swiss equity market has a set of idiosyncrasies that can be put to good use by investors. »

The first is that three companies represent around half the Swiss Performance Index’s weighting.

Many first-class firms are eclipsed by Nestlé, Roche and Novartis

A pure index-tracking strategy focusing solely on blue chips, i.e. only on the SMI, means missing out on over 130 top-quality companies for which the average index weighting is below 0.15%.

As global sellers of upscale goods or services, many of these companies create high economic value added for shareholders.

They have also demonstrated an extraordinary ability to adapt following decades of living with a strong national currency. They know how to fend off the competition.

In many cases, their share-price performances have been exceptional.

SPI weighting of 50 largest components (%) 20%

Weighting in %

15%

10%

Share ranking

Asymmetry between best and worst performers Analysing distribution of annual returns within a broad basket of shares produces the following observation: »

Over a 12-month period, a relatively small number of companies will outperform the index by a wide margin, thus significantly bettering the portfolio’s overall return.

In the same period, this extra performance will only be partly offset by negative returns on a handful of shares markedly underperforming the index.

The difference between the best and worst performers conveys a solid investment return averaging 3% per annum, well above the index.

Stock-picking combined with an equal weighting of positions results in consistent outperformance of the SPI with a lower risk than blanket exposure to the index.

Average annual outperformance by the 15 best-performing stocks in the SPI (grey) versus the average annual underperformance by the 15 worst-performing stocks (red)*

(* Performances are measured as excess return relative to the SPI over a 12-year period).

68.70%

}

-43.60%

Positive performance gap + 25.1%

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Underlying statistical concept

Swiss equities

Strategy Univers d’investissement »

The investment universe is composed of SPI constituents.

The end-portfolio contains approximately 100 companies.

Investment strategy The stock-selection process entails investing in half the names in the SPI. Companies are selected using four criteria: »

Statistical analysis of sectors on which to focus

Fundamental analysis of qualifying securities

Analysis of qualifying securities’ liquidity

Analysis of cluster risk from exposures

Statistical sector analysis is predicated on the “asymmetry between best and worst performers” concept but applied to individual sectors. The sectors to be focused on are those with the best ratio between: Extreme positive performances Extreme negative performances When shares are selected, positions are equally weighted in the portfolio. The portfolio is rebalanced periodically using an optimisation process. Rebalancing is based on statistical findings on seasonal performance variation. Equally weighting stocks harnesses the potential of the asymmetry between best and worst performers (see below).

Benefits and features »

Stock-specific risk is practically zero in contrast to index-wide exposure to the SPI.

Volatility is systematically lower than for the index.

Maximum drawdown since inception of the strategy (late 2011) is -13.56% compared with -19.47% for the SPI.

Average annual outperformance over the SPI is 3%.

Data »

Management of strategy has been audited since 2011.

Strategy is accessible through Swiss-registered investment funds or discretionary portfolio management.

Management fee starts at 0.4% annually (CHF >= 40m).

Retail classes of the fund are also available.

Data for institutional investment or similar: Discretionary portfolio

Fund RFP Swiss Equity EqualWeighted C-Class

Fund RFP Swiss Equity EqualWeighted X-Class

CH0023449942

CH0293550411

Currency

CHF

Minimum inv.

10 m

40 m

To be discussed

0.60%

max 0.4%

0.88%

ISIN

Management fee TER (approx.)

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General information

Swiss equities

Working in partnership To harness the fundamental specificities ingrained in the Swiss equity market, we have forged a partnership with Zurich-based Rieter Fischer Partners AG, a specialist in listed Swiss companies. This partnership capitalises on: »

Our expertise in quantitative and statistical analysis

Rieter Fischer’s 30-year sterling record in Swiss equity investments, founded on more than 100 company visits per year.

Banque Bonhôte & Cie SA Banque Bonhôte & Cie SA, founded in Neuchâtel in 1815, can look back on a long tradition of expertise in financial and wealth management, its core business. The compact structure of the bank guarantees effectiveness, flexibility and rapid responses to volatile developments in the markets. Its size also allows the Bank to foster a privileged relationship with each of its clients, based on trust and the quality of its services. The shareholder base is composed of individuals who are mostly members of the Executive Board and employees of the bank. This gives it a totally independent outlook and ensures the stability required for the long-term continuity of its activities.

Rieter Fischer Partners AG Rieter Fischer Partners AG was founded by Patrick Rieter and Erich Fischer in 2004 as an independent Zurich-based company specialising in active asset management for institutional investors. Its experience and expertise reside primarily in fundamental research and portfolio management relating to Swiss equities and European equities as well as balanced mandates. Clients range from companies, public and non-public pension funds and banks to financial intermediaries and select private investors. The team members each have more than 25 years experience in managing assets. In Switzerland, they are known for being one of the most experienced teams in the Swiss and European equities segment.

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Contact

Julien Stähli

Pierre-François Donzé

Karine Patron

Chief Investment Officer (CIO) MBF Boston University

M. Sc. in Economics

MScF Université de Neuchâtel

Banque Bonhôte & Cie SA - 2, quai Ostervald, 2001 Neuchâtel / Switzerland - T. +41 32 722 10 00 / contact@bonhote.ch / bonhote.ch

Disclaimer - Important legal information concerning the RFP Swiss Equity Equal-Weighted Fund The information and opinions published herein are provided without any warranty of any kind, whether statutory, express or implied. Past performance is not a reliable indicator of future performance. The value of investments and any income derived from them may go down as well as up and investors may not be able to recover the amount originally invested. This also applies to investments in the fund described in this brochure. RFP Swiss Equity Equal-Weighted is a fund under Swiss law of the type “securities funds” within the meaning of the Federal Collective Investment Schemes Act of 23 June 2006. Potential investors are expressly alerted to the risks described in the fund’s prospectus and this document should be read carefully before investing. There is no guarantee whatsoever that the fund will achieve its performance and income objectives. Any opinions or estimates expressed in this document are subject to change without notice and reflect the subjective opinion of Banque Bonhôte & Cie SA as the Fund’s promoter, representative or distributor in the current economic conditions. This document is intended to facilitate information about the fund but it does not constitute an authoritative source of information. Potential investors and other interested parties should consult the fund’s prospectuses and rules, which are the only authoritative documents. They may be obtained on request from Banque Bonhôte & Cie SA at the address shown below. Investors are advised not to rely solely on the documents provided by Banque Bonhôte & Cie SA. They should also obtain investment and tax advice from their independent professional advisers in order to evaluate the suitability of an investment in the described fund, taking into account their personal circumstances. Nothing in this document should be construed as being investment, legal, tax or other advice. The information contained in this document was prepared in good faith on the basis of sources considered to be reliable, but no representation or warranty, express or implied, is made as to its accuracy or completeness and it should not be relied on as such. Consequently, neither the authors of this document nor any persons related to the fund (including without limitation management, directors, officers, custodian bank, members of the investment committee, experts, auditors, distributors and other marketing agents, and their agents, governing bodies, employees and other third party vendors) shall be liable or have any responsibility of any kind for any direct or indirect loss or damage that an investor may incur in relation to the fund concerned, on the grounds that s/he relied on the information contained in this document. Shares in the described fund are not and cannot be offered in any jurisdiction or to any category of investors in any circumstances in which such an offer would be in violation of any applicable laws or regulations. Citizens and residents of the United States are not permitted to acquire or hold shares in the described fund. Consequently, no shares may be directly or indirectly issued, offered or sold to or for the benefit of U.S. citizens and residents or any other person that could be qualified as a U.S. Person within the meaning of the applicable laws of the United States.

Banque Bonhôte & Cie SA – Neuchâtel, Bern, Biel/Bienne, Geneva, Lausanne, Solothurn, Zurich

July 2022

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