Recommendation No. 1 - Turn away from the index!
If you want to better diversify your portfolio, the only option is to consistently deviate from the capital-weighted SPI. Of course, this can be done in different directions. As we at OLZ always place investment risk at the heart of our investment decisions, we believe that a risk-optimized equity portfolio is the right way to achieve long-term success.
We have been implementing this in our OLZ Equity Switzerland Optimized ESG fund for over 12 years. The OLZ minimum risk approach results in a portfolio that systematically reduces volatility and concentration risks and thus ensures a more robust portfolio performance, particularly in times of stress, without reducing long-term returns. On the contrary: as small and mid caps even outperform large caps in the long term, our fund even benefits from the so-called "size" risk premium with its overweight in small and mid capitalized stocks.
This disciplined approach proved its worth last year. Thanks in part to the underweighting of Nestlé and Roche, the fund closed 2023 more than 2% ahead of the SPI and up 8.21%. The outperformance of 0.66% p.a. compared to the SPI since the fund was launched (Dec. 2010) shows that the strategy also works in the long term. This was achieved with systematically lower volatility.
Recommendation no. 2 - Add small & mid caps
Is the move away from the SPI a little too extreme, and is an active investment solution possibly too expensive? But are you still concerned about the dominance of large caps? One possible solution is to add small & mid caps to the passive implementation in order to reduce the exposure to the index heavyweights. But would you like to do this without the additional volatility associated with this market segment? Then we have the right product for you with OLZ Equity Switzerland Small & Mid Cap Optimized ESG since December 2022. In 2023, it also clearly outperformed the index with a performance of +8.40%. Here too, OLZ risk optimization systematically reduces the investment risk - so much so that the historical average was only just above that of the SPI.
Whether in small Switzerland or big America - whether Nestlé and Roche or Apple and Tesla: it is better to keep certain basic principles of investing in mind. At OLZ, they have always taken center stage.