Monthly Report 03/2026

Fundamentally, the dollar’s appeal as a safe haven is waning as US stocks appear riskier while stocks in other countries are improving. This is another observation from last year that continued in the first two months of 2026. A less attractive US currency increases the incentive for global investors to reduce their dollar exposure.

This was the case during the tech bubble at the turn of the century. It is entirely possible that the dollar will fall again if stock prices decline, just as it did during the dot-com phase in 2002 when stocks performed better elsewhere. At that time, however, there was also a series of negative stock market news from the US. Today, on the other hand, technological leadership in various fields remains unbroken, and sales and profit figures are rising rapidly.

The US stock market’s focus on AI and AI-related cannibalization risks are weighing on the US, while loose fiscal policy is benefiting stocks in the rest of the world. Nevertheless, the high costs of currency hedging are being dispensed with in many places. Over the past 12 months, average currency hedging costs have been above 4% (franc vs. dollar). It is quite possible that they will fall below 4% in the next 12 months, but they will certainly remain substantial.

The decision to increase hedging ratios is independent of more general geopolitical considerations that could lead to diversification away from the US currency. Some analysts maintain their pessimistic assessment of the dollar, as the currency may have lost its special status in terms of yield, growth, and security. In Europe, there are even dreams of digital sovereignty.

We are not guided by dreams, nor do we engage in fictional scenarios such as those recently circulated by Citrini Research. Market confidence may be fragile, and fears of AI disruption may still turn into widespread risk aversion in many industries.

However, the fact remains that the technological dominance of US companies such as Microsoft, Google, Amazon, Nvidia, and AMD is based on decades of investment in innovation – and on the ability to retain innovative and (highly) qualified employees with generous compensation packages. This can even be seen in high-wage Switzerland, where around 10,000 employees work for US tech companies, 6,000 of them for Google in Zurich alone – most of them with university degrees.

With a cumulative return of 2% expected over the next ten years, very few investors are satisfied, especially since the Swiss Confederation’s long-term benchmark bond is subject to considerable price fluctuations. From a risk-adjusted perspective, it therefore makes sense to represent the stability component of the portfolio with a broadly diversified basket of corporate bonds rather than government bonds and mortgage bonds.

This is hardly possible with individual bonds. Many Swiss companies refinance themselves on the large euro capital market. Around 14,000 corporate bonds are listed there, but 86% of them are in institutional tranches, i.e., with a minimum investment of EUR 100,000. For some, the minimum volume is EUR 200,000 or higher. This means that they cannot be traded by private investors at all.

This is due to the legislator, who – as is so often the case on the capital market – wants to protect investors from risks that are supposedly too great for them. Interestingly, these restrictions do not apply to government bonds. In Italy, for example, these can be purchased in denominations of EUR 100 at any post office counter. It would be mischievous to think of the state’s financing needs on the bond market in this context.

Another important point is the right of termination. In the US in particular, but also in Northern Europe, many bonds provide for a specific right of termination for the issuer. However, this “make whole” clause is important because it enables the company to launch a long-term bond. 20- and 30-year corporate bonds are not uncommon, but they exclude tradability for private investors.

For this reason, the investment world for bonds is practically limited to active funds and passive ETFs due to regulations, even for corporate bonds with a high rating. Passive vehicles suffer from the fact that they have to reflect the market. When data center-related bonds are issued on a large scale, as is currently the case, they all flow into the ETF. This means that the character of an ETF can change fundamentally in a relatively short period of time.

Our experience has shown that an active approach to the bond market pays off. Incidentally, we have not participated in the recent wave of data center-related issues. On the contrary, we have proactively reduced the risks. As an integrated portfolio manager across multiple asset classes, it makes a lot of sense to limit cumulative risks from an industry that could potentially manifest itself in parallel on the equity and bond sides in a timely manner.

The Credit Opportunities Fund (COF), which is also more than 30% invested in investment grade bonds, tends to take advantage of the potential offered by high-yield bonds in the more conservative upper segment. This is why the average rating is also comparatively high at BB+. The Zugerberg Income Fund, on the other hand, remains clearly focused on corporate bonds with an even higher rating (A-).

In the previous section, we discussed cumulative risks. Specifically, one must imagine that a cloud provider such as Oracle must finance its immense expansion plans in the area of data centers. Internal financing through freely available cash flows from ongoing business is limited because the investment plans exceed the funds released. Accordingly, the company resorts to external financing.

External financing can be achieved by issuing shares, but this is associated with a dilution of profits for existing shareholders. Alternatively, it can be achieved by issuing bonds, which temporarily increases interest expenses and also reduces profit prospects, but to a lesser extent than issuing shares.

Against this backdrop, Oracle has issued bonds worth around $50 billion over the past nine months. More are likely to follow in the coming years. However, some investors have become more skeptical about the prospects for profitability. As a result, many Oracle bonds are already trading well below their issue price just a few months after being issued. The share price is now 56% lower than it was around five months ago. It is precisely this cumulative risk (lower share prices + lower bond prices for the same company) that needs to be avoided.

Anyone in Switzerland who experienced the grounding of the SAir Group (in the early years of Zugerberg Finanz) understands this as well. At that time, the shares fell rapidly, but the bonds also lost massive value and ultimately became worthless.

A cumulative risk can also occur within a single industry, e.g., due to the global AI scare triggered by a single analysis report on February 12, which claimed that logistics companies would become obsolete. On the stock side, this affected Kühne+Nagel (-13% in a few hours), for example, and on the bond side, Scan Global Logistics, for example. Their bonds fell rapidly to 90% in the same hours of overreaction. Since then, both stocks and bonds have largely recovered.

Nevertheless, asset managers can only control cumulative risk if they know every detail of the individual bonds in the fund or ETF. It is currently assumed that the US bond market will be used for data center-related transactions for just under 20% of issues in 2026.

This may turn out well for ETF investors, but there is certainly less certainty about this. We, on the other hand, actively spread our corporate bonds across around 18 sectors. This results in better sector diversification. Resilience is not needed in fair weather, but rather when a single sector in particular suddenly comes under severe pressure. This is where we see the value of active selection with our own bond solutions.

Our Swiss real estate selection has performed well so far this year. Swiss Prime Site (+19%), PSP Swiss Property (+15%) and Mobimo (+9%) have posted above-average gains since the beginning of the year. The Swiss Real Estate Fund Index (CHREF) remained moderate with a return of (+1.4%), but was still slightly higher than the SXI Real Estate Funds Index (+1.1%) calculated by the Swiss Stock Exchange.

Zurich Airport is a “hybrid” company that combines elements of both a real estate and an infrastructure company, with a total of over 150 properties and a concession business that enables it to operate an international airport. Airport fees will be reduced by around 10% over the next four years. At the same time, Flughafen AG is guaranteed a good return on capital. This will please shareholders in the coming years. This year, the stock, which is typically not very volatile, has already risen significantly again (+5%) and recently reached an all-time high. In addition, there will be a substantial increase in dividends in the spring.

The only negative surprise in our allocation of real estate and infrastructure stocks came from BKW (-10%), because the company made a significant write-down in fiscal year 2025 due to a valuation adjustment of around CHF 110 million on its 33% stake in the German Wilhelmshaven hard coal-fired power plant. The reasons for this are changed electricity market conditions, lower production, and less price volatility.

Infrastructure stocks performed extremely well, e.g., Enel (+15%). From 2026 to 2028, the energy supplier will invest EUR 53 billion, a large part of which will go toward expanding the energy grid and adding wind energy and battery storage to its portfolio. Shareholders’ profit sharing is also set to increase. Dividends are expected to rise by around 6% annually over the next three years. Enel shares thus remain one of the most exciting large utility stocks in Europe – with high dividends, a clear focus on profitable networks and renewable energies, and a valuation that has not yet reached its full potential.

Two other infrastructure companies, Vinci (+17%) and Veolia Environnement (+21%), have had a good start to the new year. Vinci generates around two-thirds of its operating profit from premium toll road and airport concessions. Veolia is the world’s leading provider of environmental solutions (water, waste, energy) for private households, businesses, and the public sector. The stock recently continued its strong upward trend and is proving to be a stable, high-growth stock. The “GreenUp” strategy (2024 to 2027) focuses on decarbonization, climate change adaptation, and water recycling around the globe.

Engie (+29%) is a typical stock that benefits indirectly from long-term AI development. The energy supply business model is exposed to lower risks. Nevertheless, these “AI companies beyond the spotlight” are significantly cheaper and deliver higher dividends.

Incidentally, our investment solutions in the decarbonization sector are benefiting particularly from the upward trend among energy infrastructure companies. Depending on the equity allocation, these have gained between 8% and 11% since the beginning of the year (see DecarbRevo on page 2).

Cloud providers: Amazon (-9%), Microsoft (-19%) and Alphabet (unchanged) It is unclear whether and when the huge investments in the cloud will pay off. Close attention is being paid to the “current cloud backlog” (CCB) figure, i.e. the order situation for future cloud services. At SAP (-18%), the CCB recently grew by “only” 25% instead of the expected 26%, which led to a sharp drop in the share price.

Software: After years of growth, fears arose worldwide that AI would replace software. Microsoft and SAP are just two examples; IBM, Salesforce, Oracle, and Adobe are others. Europe’s largest software distributor, Also (-24%), also suffered. However, their solutions are so deeply embedded in everyday business life with all its complex supply chains that no financial manager can afford to do without them.

Technology and energy: Three European companies have been competing for years to lead new, promising markets. As ABB (+21% to a new all-time high) explains, the clear focus is on electrification and automation. This is reflected in a new corporate structure with three business units and shared sales and technology opportunities. Siemens, 5% below its all-time high and the most valuable stock in the German DAX index, has recently suffered losses because its industrial software is considered vulnerable to AI. Schneider Electric (+18%) remains a beneficiary of the high demand for data centers, as do (in)directly small caps such as VAT Group (+41%) and Accelleron (+18%).

Construction industry and chemicals: Amrize (+13%), a building materials group focused on the US market, started the new year on a confident note. Holcim (-9%) saw consolidation at a high level following the sharp rise in the previous year – partly due to the uncertainty created by the EU regarding the framework conditions for the green transformation of the cement industry. Construction chemicals group Sika (-2%) is gradually emerging from its slump. Its rising dividend and the company’s own forecasts for 2026 are indicative of its entrepreneurial confidence. The strategy and growth targets for 2028 were confirmed. Geberit (+5%) performed in the middle of the SMI.

Healthcare: The heavyweight pharmaceutical companies lifted the SMI in the first two months. Roche (+12%) and Novartis (+19%) also outperformed the MSCI Healthcare. The eye care company Alcon (+6%) kept pace with the SMI. In contrast, the promising pharmaceutical supplier Lonza (unchanged)  fell short of our expectations.

Telecommunications: This is a winning sector. Sunrise (+16%), Swisscom (+25%) and Deutsche Telekom (+23%) are in demand, with the latter two benefiting from their enormous infrastructure, which can be used and leased profitably. Deutsche Telekom can even integrate AI directly into its network. For users, this could bring a whole new telephone experience – with chatbots and live translations, provided they use the “Magenta AI Call Assistant.”

Insurance: Insurance stocks have been down slightly worldwide since the beginning of the year, affected by fears surrounding AI and the associated pressure on premiums. This pattern has also been observed in Switzerland since the beginning of the year: Helvetia Baloise, Swiss Life, and Zurich Insurance (each down 4%). Shares in Swiss Re (+2%) and Axa (+1%) are up slightly.

Utilities: As in the previous year, shares in this sector have continued to rise overall since the beginning of the year. We highlighted this in particular in the section on real estate and infrastructure.

Institutional investors are increasingly focusing their private market allocation on return quality and liquidity without fundamentally questioning their strategic allocations, according to a study by McKinsey. Recently, distribution dynamics have gained in importance. 54% of the investors surveyed rate this as the most important criterion. The greatest risks are considered to be delayed exits (company sales or IPOs), temporary lack of liquidity (70%), and valuation discounts (62%), as are currently feared in the case of software company investments.

However, distributions in 2025 fell well below the ten-year average. In addition, there have recently been delayed IPOs and uncertainties surrounding AI-related valuation discounts. Nevertheless, around 70% of institutional investors plan to maintain or expand their private market portfolios this year. This is because the software industry in particular is adapting to AI at a particularly rapid pace. The example of Google Gemini shows that those who embed AI in their solutions gain market share.

Globally, patient private investors are currently able to buy into various markets at favorable prices. Secondary market vehicles, for example, are available for this purpose. Private investors have so far invested very little in private markets (equity, infrastructure, loans), which is why the larger players in the industry, such as Partners Group, are confident that they will be able to attract significantly more capital over the next eight years. A wide variety of vehicles are currently trading at a 20% to 30% discount to net asset value (NAV).

The listed private market providers are grouped together in one fund in our portfolios: LPActiveValue. Although the return since the beginning of the year has slipped significantly into negative territory (-11%), it is considerably less than comparable passive ETF instruments. This is also due to the fact that the fund comprises more European positions than US providers and more of those that have recorded substantial value growth in recent quarters – such as the Swiss investment company HBM Healthcare Investments.

The exposure to Bitcoin has not yielded any benefits so far this year. In risk class 5 (with a 2.5% portfolio share), the negative return contribution has risen to -0.8% of the total portfolio.