Swiss exchange-traded funds (ETFS) provide exposure to small-, mid- and large-cap stocks that trade on the SIX Swiss Exchange. Switzerland is one of the largest and strongest economies in Europe, and is still rated AAA by Standard &; Poor's Credit Rating Services after the Swiss National Bank shocked the market by unpegging the Swiss franc from the euro. Swiss ETFs allow investors to place a tactical bet on the Swiss stock market.
iShares MSCI Switzerland Capped ETF
The iShares MSCI Switzerland Capped ETF (NYSEARCA: EWL) tracks the performance of the MSCI Switzerland 25/50 Index, a market-cap-weighted index of Swiss companies. EWL provide targeted access to 85% of the Swiss stock market, excluding small-cap companies. EWL has total net assets of $1.2 billion and holds 39 stocks, which are heavily concentrated in the health care, financials and consumer staples sectors. EWL implements a passive or indexing strategy to achieves its investment objective and invests at least 80% of its total net assets into securities comprising its underlying index.
Based on trailing five-year data, EWL has a standard deviation of 16.43 and an alpha (against the MSCI ACWI Ex-U.S. NR USD Index, the global standard index) of 4.47. When compared to the MSCI ACWI Ex-U.S. NR USD Index's standard deviation, EWL experienced less volatility than a portfolio of securities comprising the index would have. EWL's alpha indicates it outperformed the standard index by an annualized 4.47% on a risk-adjusted basis.
EWL's low expense ratio provides investors with an efficient option to gain exposure to the Swiss Stock Market. EWL is best-suited for investors who seek a core holding to be overweight in Swiss stocks.
iShares Currency Hedged MSCI Switzerland ETF
Like its sister fund, the iShares Currency Hedged MSCI Switzerland ETF (NYSEARCA: HEWL) seeks to provide investment results corresponding to the MSCI Switzerland 25/50 Index. However, HEWL seeks to provide exposure to mid- and large-cap Swiss stocks while mitigating currency risk between the U.S. dollar and Swiss franc. To provide these investment results, HEWL generally invests at least 90% of its total net assets in component securities comprising its benchmark index and a maximum of 10% of its net assets in futures, options, cash and cash equivalents, and swaps.
HEWL charges an expense ratio of 0.51%, which is below the average expense ratio of miscellaneous region funds. HEWL is best-suited for U.S. investors seeking to gain exposure to Swiss stocks included in HEWL's sister fund, EWL, while hedging against foreign exchange rate fluctuation between the Swiss franc and U.S. dollar.
First Trust Switzerland AlphaDEX Fund
The First Trust Switzerland AlphaDEX ETF (NASDAQ: FSZ) tracks the Nasdaq AlphaDEX Switzerland Index, which implements the AlphaDEX stock methodology. FSZ seeks to outperform its benchmark index by using a quantitative strategy to select, rank and weight Swiss stocks based on a variety of fundamental factors. To gain exposure to this ETF, FSZ charges an expense ratio of 0.8%, which is expensive compared to its competitors. Since FSZ ranks its potential holdings based on value and growth factors, it is heavily weighted towards small- and mid-cap stocks, and it has a median market cap of $7.54 billion.
As of July 31, 2015, FSZ has a standard deviation of 11.2%, a beta of 0.93 and an alpha of 7.14 against the MSCI ACWI Ex-U.S. NR USD Index. Its annualized standard deviation indicates it experienced less volatility than the MSCI ACWI Ex-U.S. NR USD Index over this period. Its beta, against the standard index, indicates it is theoretically less volatile than and highly correlated to the index. Its alpha indicates it outperformed the standard index by an annualized 7.14% on a risk-adjusted basis, which is favorable to investors.
FSZ is best-suited for investors seeking exposure to the Swiss stock market with overweight exposure to the financial, industrial and health care sectors, while potentially outperforming its benchmark index and the global standard index.
