SIX Swiss Exchange: Mr Rüegg, Credit Suisse has had 8 ETFs on the Swiss stock exchange for some time now. What is the strategy behind the new product launch, and why …
introduce them now?
Beat Rüegg: Until now, the range of Xmtch funds has been limited to a small number of portfolio building blocks with a focus on Swiss equities and bonds. Despite this relatively small range, we have been the market leader in Switzerland for many years measured in terms of turnover on SIX Swiss Exchange. With this much wider choice of products, we are offering our investors additional building blocks that allow them to invest additionally in global equity and bond markets. They can therefore implement any balanced investment strategy using Credit Suisse ETFs alone. The expansion of our ETF family coincides with a surge in demand for transparent and easily understandable financial products.
Small and large cap indices from a variety of regions are used for the equity products. What impact does this scale effect have on the portfolio?
With the comprehensive range of large and small-cap Xmtch funds for the euro zone, the UK, USA and Japan, we offer our investors the opportunity to pursue size strategies around the world. In other words, they are able to overweight large or small caps depending on how they view the market. Countless empirical studies have proven that clever size strategies can generate considerable additional returns. In the past, for example, the price trend in the small cap segment has repeatedly taken a different direction to the rest of the market. While small companies took a disproportionately small share of the bullish market of the late 90s, they significantly outperformed larger companies between 2000 and 2007. There are several reasons to invest in small caps. Small companies can position themselves in promising market niches and thus grow faster. What’s more, they often have a fully-functioning system of corporate governance, because
effective controlling powers lie with one founder or with a group of family shareholders. From the investors’ viewpoint, small caps should generate premium returns because they are less well covered by analysts, their liquidity is restricted, and they present a higher investment risk. Where strategic asset allocation – long-term portfolio composition – is concerned, the inclusion of small caps offers real benefits in terms of diversification. These are then reflected in a lower volatility for the portfolio as a whole.
The Xmtch on SMI, launched in 2001, generates the highest turnover of any ETF on the Swiss stock exchange. Can you envisage another product or index challenging this dominance some day?
The SMI and the SPI are and will remain the leading indices for the Swiss equity market. With that in mind,
I think that our SMI-ETF will retain its position as the highest-turnover ETF in our home market. Circumstances may, of course, temporarily divert investors’ attention to one or the other specific investment issue. One example are the ETFs backed with physical gold, which recorded record turnover at the beginning of the year. That said, figures for the Xmtch (CH) on SMI have remained at a high level for years, and are not susceptible to short-term trends. With more than ten billion francs in turnover, probably our best-known Xmtch ETF led the field on SIX Swiss Exchange last year, and we’re out in front for this year too (as at May 2009).
SIX Swiss Exchange: Credit Suisse is planning to launch even more ETFs this year. What can we expect?
The 24 Xmtch ETFs that are already available already allow institutional and private investors to construct any core investment strategy they like. The additional ETFs that we are planning for this year will give our investors even more building blocks for still-greater precision in their core strategies, as well as some attractive satellite instruments to fine-tune the risk/return profiles of their portfolios as a whole.
Source: ETFWorld.co.uk – SIX Swiss Exchange
Subscribe to Our Newsletter
