When a foreign investor thinks about Switzerland and its stock market, the first name that springs to mind is Nestlé. As of late, when you’re speaking to a Swiss investor, the name of the agribusiness giant has a good chance of being dropped. This year, Nestlé has been the engine of the Swiss market, gaining more than 30% – an annual yearly performance that hasn’t been seen since 2005.
Nestlé, which accounts for a full 20% of the Swiss Performance Index (SPI), has far outpaced this index since 2001, showing a total return of 389% against the index’s 184%. That said, alongside Vevey, there are a multitude of smaller companies that are also part of the SPI. And guess what? During the same period, they managed to deliver an even better performance, with +393% against SPI Extra (the Swiss small- and midcap index). As such, if you think that Nestlé has been largely over-bought recently and its potential is running out of steam, it is worth taking a look at the most dynamic asset class of Switzerland: the small- and mid-cap sectors, which may well be ready to rejuvenate after lagging behind recently with two years of underperformance.
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