5th December 2016
Erika Mesmer, Client Relationship Manager
It’s worth putting the spotlight on insurance companies, especially in the Swiss market. These companies, part of the financial sector, are currently more attractive than banks. But what makes them interesting as investment?
Insurance companies are historically attractive dividend payers. In the current environment, with low if not negative bond yields, these companies offer, thanks to their dividend, a return of which we can only dream were bonds are concerned.
Furthermore, these have companies done their homework in the last few years and have adjusted to the economically complicated environment in order to remain competitive. Companies such as Baloise or Swiss Life are well managed companies, which today are financially sound.
And what perspectives do Insurance companies have? For some time interest rates have now been moving sidewards. They rise, they fall again, then they jump back up again. Looking at the 10 years Swiss Confederation Bond Yield, we observe a low of -0.60% in 2016 and a high a few days ago of -0.05%.
If you believe in an upcoming turning point in bond yields, then these companies hold good cards. First, they will, in such an environment of higher yields, be able to generate higher returns on their investments. Secondly, and this is even more interesting, insurance companies will be able, especially in the segment of life insurance, to offer more attractive products, which will allow them to attract more clients.
Swiss insurance companies are overweighted in the IAM Swiss Equity Fund. Further information about the fund is available here. >>http://www.iam.ch/en/private-customer/fonds-iamfunds-ch/iam-swiss-equity-fund/