In this section, contributors share their views on economic and financial topics.

Swiss investors have traditionally placed a great deal of trust in their home market. That is understandable: Switzerland stands for stability, legal certainty, a strong currency, and world-class companies. Yet that very familiarity can become a trap. Many portfolios are more heavily exposed to Switzerland than they appear at first glance.

A glimpse of this became visible in August 2025, when the United States imposed a 39 percent tariff on Swiss exports. The SMI dropped almost two percent in a single session. After months of negotiations and Switzerland’s commitment to invest at least USD 200 billion in the United States, the rate was reduced to 15 percent.

«Swiss investors benefit from one of the most stable financial centres in the world. But stability is not the same as diversification.»

The episode quickly faded from the headlines. But the underlying question remains: how robust are Swiss portfolios when external shocks hit the home market?

Familiarity is not diversification

Swiss investors benefit from one of the most stable financial centres in the world. But stability is not the same as diversification.

Swiss pension funds hold, on average, between 33 and 40 percent of their equity assets in domestic stocks. If this allocation reflected Switzerland’s share of global equity markets, the figure would be closer to 2 percent. On top of that, many investors earn their income in Switzerland, own Swiss real estate, hold Swiss bonds, and invest in Swiss equities.

The result is a concentration risk that often goes unnoticed in normal times. In periods of stress, however, it can become decisive.

The Swiss equity market itself is also less broadly diversified than many investors assume. At the end of 2024, almost half of the Swiss Market Index consisted of just three companies: Nestlé, Novartis, and Roche. In the MSCI Switzerland Index, the same three companies still accounted for around 38 percent of total market capitalisation.

A Swiss equity index may look diversified on paper. In practice, however, its performance depends heavily on a small number of large companies.

This is not just a Swiss problem

This development is not unique to Switzerland. In the United States, market concentration has also risen sharply. The ten largest companies now account for around 41 percent of the S&P 500, a level not seen since the dot-com bubble.

«Foreign revenues are not the same as international diversification.»

For investors, this means that simply moving from Swiss equities into US equities does not automatically solve the problem. In some cases, it merely replaces three Swiss heavyweights with a handful of American technology companies.

The geography changes. The underlying concentration problem remains.

Global Swiss companies are not enough

A common argument is that Swiss blue chips are global companies anyway. Nestlé, Novartis, and Roche generate a large share of their revenues abroad. So why invest internationally as well?

The answer is simple: foreign revenues are not the same as international diversification.

A Swiss stock remains a Swiss stock. It is listed in Switzerland, shaped by the Swiss market environment, and exposed to many of the same regulatory, currency, and index dynamics as other Swiss equities. Global revenues may soften some risks. They do not replace direct exposure to different markets, regions, and economic cycles.

That is where genuine diversification becomes valuable. Not all economies move in the same rhythm. Markets such as Japan, India, or Brazil are partly driven by different forces than Switzerland, Europe, or the United States. They react differently to interest rates, currencies, commodity prices, and political developments.

For Swiss investors, this can help reduce dependence on the home market.

Diversification requires more than foreign equities

Geographic diversification alone is not enough. Many global equity indices are themselves highly concentrated. Investors who allocate internationally should therefore look not only at countries, but also at sectors, currencies, sources of return, and asset classes.

This is where private markets become relevant. Private equity, private credit, infrastructure, and real estate can help broaden portfolios because they are not traded daily on public exchanges and their performance is more closely linked to long-term fundamentals.

«No single market can do everything at once.»

Large international endowments, including Yale and Harvard, have used a mix of listed assets and alternative asset classes for decades. The reason is straightforward: different sources of return can make portfolios more resilient.

For Swiss investors, this point is particularly relevant. The domestic market is dominated by a small number of large companies and specific sectors. Private market investments can provide access to areas that are barely represented on the Swiss stock exchange, including infrastructure, specialised credit strategies, growth companies, and international real estate segments.

Switzerland remains strong, but it is not enough on its own

Switzerland remains an exceptionally stable and attractive market. Precisely for that reason, it forms a solid foundation for many investors.

But a solid foundation is not the same as a complete portfolio.

No single market can do everything at once: absorb external shocks, deliver real returns, provide broad risk diversification, and reduce dependence on a small number of companies or sectors. Not even Switzerland.

For Swiss investors, the answer is not less quality, but more breadth. Those who diversify across regions, sectors, currencies, and asset classes are better prepared for more demanding market phases.

The key question is therefore not whether Swiss investors should trust their home market. They can. The more important question is whether they trust it too much.

Wassim Jomaa is CIO at Petiole Asset Management.

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