August 29, 2020
Switzerland is arguable the most antifragile country in the world. It has a strong economy and a significant amount of the rich and powerful still use it as a safe haven to store their wealth.
During war time Switzerland has the ability to close itself off from the outside world, defend their borders, and wait until things calm down again. They have plenty of food and water and are relatively self-sustainable, unlike some other economically strong countries like Singapore for example.
I was reading about REITs in Singapore recently and started wondering if there are similar real estate funds for Switzerland. After all, if you’re looking to invest into real estate for wealth preservation and for the long-term, then investing in an antifragile country is a good bet.
Investing in real estate funds/ETFs comes gives you diversified exposure to real estate without the hassle of actually being a landlord. It’s also a much more liquid investment than physical property.
The downsides are similar to those of index funds: your upside is capped due to significant diversification. You could potentially get a much higher return if you do your own research, find a property that is a great deal in a good location, fix it up a bit, and re-sell in the future.
If you’re just looking to add real estate as an asset class to your portfolio for diversification purposes however then funds are a good option. Here’s what I found out about real estate funds in Switzerland.
There are no REITs in Switzerland but there are mutual funds and ETFs that fulfill a similar function. Many are publicly traded on the SIX, which is Switzerlands main stock exchange, so they’re liquid.
Two examples of real estate mutual funds are CS Real Estate Fund Hospitality and CS Real Estate Fund LivingPlus. From what I can see, these funds are actively managed and have an investment mandate, e.g. the LivingPlus fund focuses on investing in properties catering to Switzerland’s rapidly aging population. The expense ratios are in the 0.6-1.5% range.
Examples of ETFs are UBS ETF (CH) SXI Real Estate® and CS (CH) Swiss Real Estate Securities Fund. These ETFs invest into other real estate funds listed on the SIX, like the mutual funds listed above, giving you the broadest possible exposure to Swiss real estate. I particularly like the first one due to the low expense ratio of 0.5%.
There are certainly downsides. You’re exposing yourself significantly to the Swiss Franc and while the funds are publicly traded, liquidity is much lower than for REITs in countries like the US. But the option to invest in Swiss real estate through funds is certainly there if it’s something you’re interested in.
You can find some more information and Swiss real estate funds here.
I'm the founder of Fonos. I write about building companies, learning new tech, barbell investing, and my search for crypto businesses that aren't scams. Sign up below to get my posts delivered to your inbox.