Compass Portfolio Management AG
Riedstrasse 11, CH-6330 Cham
Telephone +41 (0)41 725 35 48
Fax +41 (0)41 725 35 49
compasspm(at)compasspm.ch



Investment strategy

Anlagestrategie_ENG

Knowing how capital markets work

The experience of investors and the research activities performed by academics all leads to the same conclusion: higher returns can be achieved through targeted investments in the right value drivers.

The strong competition on capital markets ensures that profits can only very rarely be achieved entirely without risks. However, not all risks reliably result in profits. We will highlight risks for you that are worth taking and – just as importantly – the risks that do not pay off.

The markets compensate investors for the capital they provide. Numerous companies compete for investment capital and millions of investors compete for the best investment ideas and the most attractive returns. This competition drives the financial markets to fair valuations.

Traditional asset managers want to outperform the market. They attempt to predict the future or to benefit from “incorrect valuations” on the market. Normally, this search process is expensive and bears no fruit. Forecasts turn out to be incorrect assessments and hot tips for stocks turn out to be flops. It is therefore hard to make generally applicable predictions because entering into different risks produces different investment returns. We will show you how you can take a conscious approach to considering opportunities and risks.

Perceiving opportunities and avoiding the wrong risks

We use the findings from the world of public finance to show you where the long-term opportunities lie and which value drivers constitute risks without rewards.

Depending on your investment objective and risk tolerance, a pure bond portfolio, a mixture of bonds, shares and other investment categories or a pure share portfolio may be ideal.

Investments in bonds place the focus on ongoing income and lessen the risk of value fluctuations in the entire portfolio. Three factors determine bond income:

The maturity effect:
Fixed-income investments with longer terms produce more income than short-term bonds.

  1. The creditworthiness effect:
    Investments in non-government bonds result in higher returns and may even lessen the risks given the right diversification. The lower the creditworthiness, the more attractive the potential returns. However, this is only true if the portfolio is broadly diversified across countries, terms, sectors and creditworthiness classes.
  2. The currency effect:
    Portfolios comprising several currencies are sensible from a home currency perspective if they are optimally constructed.

Shares are the most attractive form for long-term investors. This applies for nominal and real saving.

Returns from shares are determined by three factors:

  1. The market effect:
    Shares may have higher fluctuations than bonds and therefore have higher returns.
  2. The capitalisation effect:
    Smaller companies bring higher long-term returns than larger firms.
  3. The valuation effect:
    Companies with a lower valuation (value stocks) have higher returns than companies with a higher valuation (growth stocks).

Relying on balanced portfolios

We know that well-balanced portfolios perform more steadily and achieve more attractive returns over the long term.

To invest successfully means utilising opportunities that bring returns and avoiding risks that are not compensated. Avoidable risks include holding too few different securities, gambling on individual securities, countries, industries, currencies or interest rates and faith in market forecasts. Diversification is needed to balance out the incidental success or failure of individual investments. It lays the foundation for the portfolio to benefit from major economic forces. We will determine your prospects for success in a comprehensible manner.

Considering individual needs

A individual strategy forms the basis for over 90% of future success. We determine the optimal composition of the investments based on your individual objectives, your personal circumstances and your personal acceptance of value fluctuations.

The degree of variety on capital markets is not easy to comprehend. There are thousands of shares and bonds at home and abroad. A group of securities with similar economic properties is known as an investment category. We know that price movements in some investment categories differ from one another. Investors can benefit by optimising the composition of their investment categories based on their individual financial situation.

Investment categories include small-cap, mid-cap and large-cap shares at home and abroad, value stocks and growth stocks, shares from emerging economies and bonds at home and abroad, as well as property. These investment categories play different roles in investor portfolios. The optimal combination simultaneously produces high returns and reduces risks.

There is no combination of investment categories that is ideal for everyone. Each investor has their own tolerance for risks, individual objectives and personal circumstances. For this reason, we evaluate the optimal composition of your assets together with you.