2023 Unwrapped: A market review by Our Chief Investment Officer

Dear community,

2023 is dead, long live 2024! Looking back, 2023 was mostly a good year, providing a welcome change after the challenging 2022. It will be remembered as the year when cash deposits began earning returns again and most investments yielded profits - two significant shifts from which our clients greatly benefited.??

To give some numbers: A client who opened an account with Alpian in January 2023 and funded it with CHF 100,000, keeping CHF 70,000 in cash and investing CHF 30,000 in a balanced discretionary portfolio, would have seen their wealth increase by CHF 2,299. This growth serves as a testament to our commitment to helping our clients grow their wealth.?

Can 2024 be as good? While interest rates and markets fluctuate, making each year different from the last, you can be assured of one thing: With our advocacy for a fair banking model, you can count on us to help you make the most of the Swiss Francs you entrust to us.?

Before we embark on this journey, let's do a quick recap of 2023 and share what's on our agenda.?

On behalf of Alpian, I wish you a happy new year.?

Market at a glance: Quizás, quizás, quizás?

If we were to summarise 2023 with a single song, it would be “Quizás, quizás, quizás”.??

This iconic song by Cuban songwriter Osvaldo Farrès written in 1947 has been covered by many renowned artists, from Bing Crosby to Nat King Cole, and more recently by Andrea Bocelli and Gregory Porter.??

With its melancholic melody and vivacious rhythm, it tells the story of a protagonist in a relationship with someone who never provides clear answers ('Maybe, maybe, maybe'). Why this choice??

Well, it's essentially the answer the market gave to all the modern-day Pythias who tried to divine its course by reading its entrails throughout the year.??

Nearly all questions asked received the same elusive treatment: 'Is a recession imminent?', 'Have we reached the peak of high interest rates?' 'Should we expect consumers and companies to struggle if interest rates remain high?' 'Will real estate markets decline if borrowing becomes more difficult?' 'Are cryptocurrencies becoming mainstream?' 'Is the Chinese market poised for a rebound soon?' 'Is de-dollarisation happening now?', etc.?

Each time, investors were left with mixed pieces of economic information: “Maybe, maybe not”. And it didn’t prevent markets from running their course.??

Key takeaways ?

• 2023 was challenging to predict, with most forecasters missing the mark, as is often the case.?
• Despite all signs pointing to poor market performance, the year turned out to be favorable overall.?

• Equity markets in the U.S., Europe, and Japan flourished, while Swiss and Chinese markets underperformed. The strength of the Swiss franc reduced returns, but international diversification remained a sound strategy.?
• Bond markets experienced initial drops due to rising interest rates, followed by a rebound later in the year. As we are likely witnessing the end of the interest rate hiking cycle, bondholders can expect increased visibility.??
• Cryptocurrencies staged their anticipated comeback, contributing positively to portfolio returns.?
• Holding cash wasn't disadvantageous, yet Swiss investors could have benefitted more from investing in financial markets. A balanced strategy at Alpian yielded a 6.13% gain.?
• Forecasts for 2024 suggest challenging times, but such predictions only affect those who believe in them. Our recommendation: prioritise actions over forecasts. A patient, long-term approach with tactical adjustments surpasses reliance on uncertain predictions…?

Read our full analysis to understand in detail what happened with equities, bonds, gold, commodities, and more.

Demystification room: to hedge or not to hedge??

The Swiss Franc has always been both a curse and a blessing for the Swiss. It's a blessing for holidays and imports, but a curse when investing abroad.?

2023 illustrated this well. With the Swiss Franc appreciating by 9.0% against the US dollar and 6.1% against the euro, Swiss investors who invested outside Switzerland saw diminished gains due to currency fluctuations.?

However, currency risk isn't inevitable, as there are ways to hedge investments. For instance, if you're investing through funds and ETFs, consider a hedged share class.??

It’s important to note that hedging costs have risen recently. For example, hedging a basket of international stocks (MSCI World) costs between 2.5% to 3.5% per annum in recent years.?

This presents a tricky choice for investors: Accept a sure cost, akin to an annual tax on investments, or face large fluctuations that can significantly impact returns.?

Without a crystal ball, historical data offers valuable insights. Over the past 22 years, hedging against currency risks in a basket of international stocks would have been the better strategy, not just from a return perspective but also in reducing risk (as measured by volatility). While these findings aren't absolute, for Swiss investors, considering hedging could be beneficial.?

Have you considered using Alpian for your currency exchanges??

If you convert 10,000 Swiss francs to Euros, how much do you get??

The reality of converting money often involves hidden fees, commissions, and inflated rates, a familiar issue for frequent travelers, online shoppers on international sites, and anyone sending money overseas.?

On average, in Switzerland, you could be losing as much as 1.4% on every transaction. But with Alpian, it's a different story – we keep our mark-up to just 0.20% on weekdays.?

Our recent comparative study with Switzerland's top 7 money exchange providers shows a stark difference: Alpian leads in currency exchange, offering you the best value for your money.?

Infographic insight: When converting CHF 10,000 to EUR, the amount you receive varies significantly among providers. Our infographic reveals the real numbers, showcasing the savings you can enjoy with Alpian compared to others.?

This means more Euros for every franc you exchange, especially when converting Swiss Francs to Euros, US Dollars, and British Pounds.?

Dive into our comprehensive study for a clear picture: Comparative analysis of foreign exchange rates: Alpian’s competitive advantage |?Alpian |?Swiss banking excellence??