Fundamentals
Valuation Ratios in International Equity Markets
Country | CAPE | PE | PC | PB | PS | DY |
World Average | 20.7 | 18.8 | 10.8 | 2.1 | 1.2 | 2.3% |
Switzerland | 23.4 | 19.7 | 13.3 | 2.7 | 2.0 | 3.0% |
On the basis of book value, Switzerland's market is expensive compared to the world average. However, its 22% premium shrinks to a 6% premium when corrected for sector exposure.
Economic Freedom
Switzerland is the fifth freest country in the world. Improvements in labor and trade freedom have led to its rise over the past few years. Switzerland enjoys strong employment, monetary stability, and low public debt.
2015 Index of Economic Freedom
Transparency
Switzerland is one of the least corrupt countries in the world. It is one of the least likely places to have to pay bribes. The country's government is expert at rooting out any signs of corruption.
Discounted Exposure
Swiss Helvetia Fund, Inc (SWZ) currently trades at about a 14% discount to its NAV. That discount is greater than its 10 year, 5 year, 1 year, and year to date average discount.
Conclusion
Switzerland's equity market is not cheap. Buying it at a discount to NAV via a closed-end fund/CEF helps take the cost down somewhat. Also, the transparent, free economy help justify the premium that the Swiss market commands.