In the highly complex world of financial markets, investors are looking for clear and reliable information for initial and independent orientation. The Swiss equity indices are of central importance for investors who wish to place their capital on Swiss equity markets. This applies both to long-term investment strategies and to investors who want to take advantage of short-term opportunities with equity securities on the stock exchange.
The Swiss stock exchange has several share indices, which in their entirety serve as a barometer for the country’s overall economic performance. If you understand the structure, composition and functioning of a stock index, you will already have a sound understanding of the markets. Furthermore, a Swiss equity index will give you valuable insights into the opportunities and risks associated with trading Swiss equities.
This beginner’s guide will give you a detailed overview of the most important Swiss equity indices. Each of these indices offers insights into different aspects of the Swiss economy.
Contents
The most important facts in brief
- A stock index shows the development of a defined part of the stock market.
- The selection of shares in an index serves to reflect the stock market of a country, a region, a sector or other sub-sectors.
- The stocks included in the index are weighted according to market capitalization or another defined method.
- An equity index enables investors to compare the performance of their portfolio with the comparable overall market.
- Equity indices are not tradable securities, but statistical tools.
- With ETFs, which track indices, investors invest indirectly in indices.
A stock index, also known as a stock market index, is a statistical measure developed to represent the performance of a specific part of the stock market or the entire stock market of a country or region. It serves as a benchmark for measuring general market performance and not for measuring the performance of individual companies.
A stock index usually has the following characteristics:
- Composition: A stock index consists of a fixed group of selected stocks that are typically chosen according to certain criteria. These criteria may include market capitalization, sector, liquidity or other factors. The selection of shares is representative of the overall market or a specific market sector.
- Weighting: Each share in the index is weighted according to its market capitalization or another defined method. This means that larger companies with higher market capitalization have a greater influence on the index than smaller ones.
- Calculation: An equity index is usually calculated by adding up the current prices of the shares included, taking into account the weighting. Changes in share prices lead to changes in the index level.
- Benchmark: Share indices often serve as benchmarks against which the performance of investment funds, portfolios or individual shares is measured. Investors use these benchmarks to assess how well their investments are performing compared to the broader market or a specific market segment.
- Historical data: Stock indices provide historical data that allows investors to analyze the performance of the market over time and identify trends. The closing levels of stocks are usually used for this purpose.
The reference point for calculating a share index is always a fixed point in time. The subsequent changes in the share index reflect the performance of the shares contained in the index. The respective level is expressed in index points.
Well-known global examples of share indices are the S&P 500 in the USA, the DAX in Germany, the Nikkei 225 in Japan and the Swiss Market Index (SMI) in Switzerland.
Swiss Market Index (SMI)
The blue-chip SMI index, the most prominent share index in Switzerland, contains the 20 largest companies from the SPI. It represents around 80 percent of the total market capitalization of the Swiss stock market. The SMI is free-float-adjusted: Only the tradable shares in the index are taken into account.
By limiting the share weightings, it is guaranteed that no single company has more than 20 percent influence on the index. The SMI therefore complies with the ESMA UCITS guidelines. It can therefore be used within the EU as a benchmark for the Swiss equity market.
The SMI is published as a price index (price index) and is listed under the name SMIC as a so-called performance index. As the SMI tracks a large part of the Swiss equity market, it serves as an underlying for a large number of financial instruments such as options, futures and ETFs.
The SMI was launched on June 30, 1988 with 1,500 points. The composition of the index is reviewed annually. The SMI is calculated in real time. This means that every trade by a company included in the SMI triggers a recalculation of the index.
The largest individual stocks in the SMI by weighting (as at 30.10.2023) are
| Company | Sector | Weighting in the index |
| Nestlé | Nestlé Food | 22.96 percent |
| Novartis | Pharmaceuticals | 15.91 percent |
| Roche | Pharmacy | 14.05 percent |
| UBS | Finance | 5.83 percent |
| Zurich | Finance/Insurance | 5.34 percent |
| Richemont | Luxury goods | 4.54 percent |
| ABB | Electrical engineering | 4.81 percent |
Historical development of the SMI (performance)
The Swiss Market Index (SMI) was launched on June 30, 1988. Here is a summary of the historical performance of the SMI since its launch in 1988:
- Early years (1988-1990s): The SMI started at a base value of 1,500 points. It experienced moderate fluctuations in the early years, but showed an overall upward trend.
- Rise and dotcom bubble (late 1990s): In the late 1990s, the SMI experienced a significant rise, driven by a general enthusiasm for technology stocks. The index reached over 8,000 points for the first time in July 1998. This period was characterized by the so-called dotcom bubble, which eventually burst.
- Decline and recovery (early 2000s): After the dotcom bubble burst, the SMI experienced a decline and entered a consolidation phase in the following years. In the early 2000s, however, the index recovered and approached its previous highs.
- Financial crisis (2008-2009): The SMI, like many other equity indices worldwide, was hit hard during the global financial crisis. It recorded significant losses, but recovered in the years that followed.
- Developments since 2010: Since around 2010, the SMI has shown a general upward trend, with occasional corrections and fluctuations. The SMI reached its highest level to date at 12,573 points on August 18, 2021. As at 30.10.2023, the SMI stands at around 10,400 points. The SMI has performed 17.4% over the past 5 years (as at 30.10.2023).
Overall, the SMI has shown a stable performance in the past, with some fluctuations due to global and local economic events. Its history is therefore a reflection of the economic dynamism and growth of the Swiss economy.
Swiss Performance Index (SPI)
The Swiss Performance Index (SPI) includes almost all shares listed on the SIX Swiss Exchange. It is therefore also regarded as the overall market index of the Swiss equity market.
The SPI is a total return index, which means that all dividend and interest payments are included in the index and not just price gains.
The SPI was introduced in 1987 and has been on an upward trend ever since, despite some dips during the economic crises. It offers investors broad coverage of the Swiss stock market and includes a large number of companies from various sectors. The largest individual stocks include Nestlé, Roche and Novartis.
Performance over the past 5 years (as at 30.10.2023): 30.1 percent
Swiss Mid Index (SMIM)
The Swiss Mid Index (SMIM) comprises the 30 largest companies on the Swiss stock market that are not yet listed in the blue-chip SMI index. The Swiss Mid Index enables investors to track the performance of companies that are not large enough to be included in the SMI but still play a significant role in the Swiss equity market.
As with the SMI, the weighting is based on the market capitalization and turnover of the individual stocks. The SMIM was introduced in 2004 and since then has shown a mixed development, depending on the specific conditions in the respective sectors of the companies included in the index.
Performance over the past 5 years (as at 30.10.2023): – 0.6 percent
Swiss Leader Index (SLI)
The SLI Swiss Leader Index consists of the shares of the SMI and the ten largest stocks of the SMIM and thus comprises the 30 most liquid and largest stocks on the Swiss equity market. The SLI has been calculated for publication in real time since July 2, 2007.
The index was calculated back to the end of 1999 and standardized as at 30.12.1999 with an initial value of 1,000 index points. This allows it to be compared with other indices.
In contrast to other indices, the SLI limits the weightings: The four largest stocks are each limited to 9 percent. In addition, the index weighting of all other stocks is limited to 4.5 percent if required.
The SLI is an alternative to the blue-chip SMI index. The idea is that the five largest stocks in the SMI already account for a combined weighting of around 70 percent. Therefore, strong price fluctuations in these stocks have an excessively strong influence on the index value. By limiting the weighting in the SLI, the weighting of smaller stocks is increased, which better diversifies the price risk.
In addition, this limitation enables the SLI to meet regulatory requirements in Switzerland, the EU and the USA, thereby opening up new investor groups and markets. As the weighting is constantly changing, the limitation factor required for the index calculation is recalculated and adjusted every three months by the SIX Swiss Exchange.
Performance over the past 5 years (as at 30.10.2023): 16.4 percent
MSCI Switzerland
The MSCI Switzerland is an international equity index created by MSCI. It comprises a broad range of Swiss companies and is often used by international investors for investment decisions to measure the performance of the Swiss market.
The index contains the 39 largest stocks in the SPI index. This means that around 85% of Switzerland’s market capitalization (freely tradable shares) is represented. The most important stocks are Nestlé, Roche and Novartis.
The MSCI Switzerland has shown an overall positive performance in the past, even if it is influenced by global economic events, as many of the companies included in the index are heavily involved in international trade.
Performance over the past 5 years (as at 30.10.2023): 25.98 percent
The Swiss All Share Index is a comprehensive benchmark index that includes all shares in Switzerland and the Principality of Liechtenstein . Upon application, companies that are primarily listed on the SIX Swiss Exchange can also be included in the index. Furthermore, the Swiss All Share also includes stocks that cannot be included in the SPI due to the free-float limit of 20 percent.
This index thus offers investors an overall view of the Swiss equity market, irrespective of the size of the company or the sector in which it operates. The launch of the index in July 1998 was triggered by the exclusion of investment companies from the SPI. The index level of the SPI as at 30.06.1998 was adopted. The performance index was standardized at 1,000 index points.
Performance over the past 5 years (as at 30.10.2023): 30.2 percent
BX Swiss TOP 30 (BX)
The BX Swiss TOP 30 (BX) was launched by the Zurich stock exchange BX Swiss. It contains the 30 largest shares in Switzerland. The prerequisite for inclusion in the index is an average trading volume of at least CHF 7,500. In addition, at least 20 percent of the shares must be in free float and the company must be listed in Switzerland. The index is recompiled every quarter.
Performance over the past 5 years (as at 30.10.2023): 15.0 percent
Frequently asked questions (FAQ)
Are equity indices and ETFs the same thing?
An equity index and an ETF are two different things. An equity index is a measure that represents the performance of a group of shares, such as the Swiss All Share Index. An ETF, on the other hand, is an exchange-traded fund that tracks a specific index, such as a stock index.
How does an equity index work?
A share index measures the performance of a specific group of shares and summarizes the values in a group. It provides a snapshot of general market trends and allows investors to compare the performance of their portfolio with the market as a whole.
What are the advantages of investing in an equity index?
The advantage of investing in an equity index (via an ETF) is that it provides broad diversification and reduces the risk associated with investing in individual stocks. It also requires less time compared to buying individual shares directly.
Equity indices are limited to the stocks included in the index (for example, the SMI is dominated by Nestlé, Novartis and Roche). If you are a fan of a particular sector or company, index investing could mean you miss out on the opportunity to invest specifically in these companies. Equity indices are susceptible to the general volatility of the market. Index funds and ETFs follow passive strategies and do not offer active management or adjustment of your investments in response to changing market conditions. This may mean that you do not take advantage of market opportunities or protect your portfolio in times of high volatility.
Quellenangaben
- [1] boerse.de
- [2] wikipedia.org
- [3] ig.com
- [4] .finanzen.ch
- [5] nationalmuseum.ch
- [6] onvista.de