Investment solutions: Investment opportunities for every type of investor
There are countless investment opportunities. But which ones are worth my while? The experts from Credit Suisse's Investment Solutions unit keep pace with the latest trends and can assist during personal consultations.
In this interview with Olivier Fräfel, Head of Investment Solutions, we discuss exciting investment themes and diverse investment opportunities.
Mr. Fräfel, are there any investment themes to which you give a higher weighting at the moment?
We are currently dealing with an environment of low or even negative interest rates. In this market environment, people are asking themselves more than ever before how to invest their money. After the latest record highs on the stock market, it is clear to us that investing for the long term is more promising than stockpiling cash. In other words, people sacrifice vast potential for returns when they hold on to large amounts of cash. We are convinced that it makes much more sense to invest one's savings for the long term and in line with a personal investment strategy.
What investment solutions are you talking about?
What's important is choosing the correct, or rather, the appropriate strategy. Based on the strategy, you can seek out the most suitable investment themes and solutions. As you do, you always need to keep a good level of diversification. We still see a lot of potential in long-term investment themes and in Supertrends like technology and infrastructure. Our Asset Management department has a strong track record, especially in this area, and offers many impressive funds, the Credit Suisse (Lux) Digital Health Equity Fund 1 for example.
What's more, the issue of environmental, social, and governance investing – ESG for short – as well as sustainable investing are becoming increasingly important to our clients. Besides several good external solutions, we also offer highly interesting in-house solutions – for example, the Credit Suisse (Lux) Edutainment Equity Fund 1 or the Credit Suisse Responsible Consumer Fund 1 (details). While the former invests in the digitalization of education, the latter concentrates on sustainable consumption. Those are just three of the many interesting opportunities in the area of stocks. Another extremely enticing asset class is private equity.
In the past, private equity was primarily found in the portfolios of institutional investors. How can private equity be a lucrative means of diversification for private investors as well?
The minimum investment used to be set higher – too high for many private investors. Thanks to so-called "feeder" structures and more efficient settlement, people can now invest in private equity with relatively little capital. Nevertheless, the minimum investment today is still between CHF 100,000 and CHF 250,000, depending on the vehicle, but the amount invested should not exceed five percent of the assets.
The reason is that the invested capital is normally blocked for 10 to 12 years. For this situation, investors are normally compensated with an illiquidity premium. Consequently, anyone who has roughly two million dollars in disposable assets and can get by without the invested capital for a few years will find that private equity offers extremely enticing yield potential.
Wealth management solutions are our "all-included, carefree package deals."
Olivier Fräfel, Head of Investment Solutions
Are there also any investment opportunities that do not require clients to perform time-consuming management and that generate returns even with a minimal amount of capital invested?
They do indeed exist. Internally, we refer to our wealth management solutions as the ultimate in investing. Discretionary mandates and wealth management funds combine both a personal investment strategy and our research opinions – that is, the Credit Suisse House View. There is a clear focus on diversification across every asset class, as well as across regions. It's interesting to note that our Credit Suisse experts manage these investment solutions for our clients from end to end. They represent our "all-included, carefree package deals," so to speak.
So, it makes sense to invest my entire assets in wealth management solutions?
In my opinion at least a substantial portion of your assets should be invested in a wealth management solution. We advise most of our clients to put as much as 70% of their assets in a broadly diversified solution that matches their investor profile. They can use the remaining 30% of their assets to take advantage of other interesting investment opportunities. This can be done through what are known as "satellite" investments. A "core/satellite" approach thus combines the two most important aspects of investing: Sensible investing with the thrill of actively managing a portfolio. This strategy is suitable for virtually any type of investor.
So, the ideal solution is accessible to every client?
Exactly! On the one hand, we have our mandates, which require an investment of CHF 100,000 to CHF 250,000 depending on the specifications. On the other, Credit Suisse Asset Management offers nearly identical solutions in the way of funds. People can take advantage of them with an investment of a few hundred francs.
What investment solutions are suitable for absolute beginners with a limited budget?
There is one basic principle. The more broadly diversified a solution is, the better suited it is for newcomers to the field of investing. However, that always depends on the person's individual needs and investment objectives. For example, our investment fund savings plan is popular with beginners. It allows clients to invest a certain amount each month, thereby building their wealth over the long term. This eliminates the question of when the best time to invest is.
What about professionals?
We also have a variety of solutions on tap just for investing professionals. As a rule, our experienced clients have access to all of our investment solutions. They range from structured products to options strategies and initial public offerings (IPOs) to commodities futures. The important thing for this type of investor is that they have an absolute professional at their side to advise them. Among those advisors, they will find our investment consultants and product experts, who point out opportunities to clients.
Are initial public offerings also lucrative for private investors?
Of course! However, it is not always easy for private investors to obtain the desired allotment. In the end, things are governed by the law of supply and demand. A good example of that is the best known Swiss IPO of 2019 when Stadler Rail went public. It was massively oversubscribed. In other words, the demand for shares exceeded the supply several times over. That proves the enormous interest in IPOs, even among private investors.
What goals do you generally set with your investment recommendations?
Ultimately, we always try to combine the best investment themes with the best solutions, all in the interest of our clients. Our aim at all times is to help our clients achieve their investment objectives. Furthermore, our desire is to assist our client advisors with expertise and supporting sales material so that our clients can experience our bank's complete investing expertise.
Do you personally follow a certain investment strategy?
Yes, I take a balanced strategy by applying a core/satellite approach. That means I keep a mandate at the center with a portfolio covering most of my assets. With the rest of my assets, I follow my convictions through satellite investments. They encompass theme funds, equities, and private equity.
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1 Credit Suisse (Lux) Digital Equity Fund, Credit Suisse (Lux) Edutainment Equity Fund, Credit Suisse Responsible Consumer Fund, Credit Suisse (Lux) Portfolio Fund Yield CHF
These funds are domiciled and registered in Switzerland. The fund management company is Credit Suisse Funds AG, Zurich. The custodian bank is Credit Suisse (Switzerland) Ltd, Zurich. The prospectus, the simplified prospectus and/or the Key Investor Information Document (KIID) and the annual and half-yearly reports may be obtained free of charge from the fund management company or from any branch of Credit Suisse (Switzerland) Ltd. in Switzerland. These documents should be read carefully before making an actual investment.
Investment principal on bonds can be eroded depending on sale price, market price or changes in redemption amounts.