Hi all,
Vanguard has recently released its 10 years market outlook report - link
If one assumes that the report is directionally correct, we’re looking at meagre returns for us poor Swiss investors.
What are your thoughts? Are you well positioned for the outlook depicted by Vanguard? Happy to hear you
I think even though expected returns are low, it wouldn’t change the strategy much
Equities are still higher in terms of expected returns
Equities are still more volatile
So it shouldn’t change asset allocation strategy for most investors. People who are all in stocks would continue to do so.
What this changes is return expectations and hence assumptions for future value of assets. And maybe makes 60-40 Portfolio interesting for low risk tolerant investors
Personally I am underweight US stocks anyways, so not much to change there too for me.
Nothing much you can or should do.
Buy a global equity fund and let the market sort it out itself.
Although I do personally slightly underweight the US (currently like ~6%), in part due to that, but also not being comfortable being more than 60% in a single country with my investments.
And I use leverage + managed futures, but that is not due to the market outlook and I would do that regardless.
Lower nominal returns for the same asset in CHF than when denominated in other currencies means strengthening of the Swiss franc on the international place. Good for importations and travel, bad for the exportation industry. Probably low inflation.
Actionable:
For accumulators:
Lower returns means more time to buy assets at relatively the same price. Strengthen your skillset to ensure you can keep your salary or increase it, maintain a high savings rate or increase it and keep investing.
For people in the distribution phase:
The 4% rule takes into account periods of lower stocks and bonds returns. Use a SWR that lets you feel comfortable and enjoy your life.
For all:
This is just a Vanguard projection. Models and projections have been known to be wrong on specific timeframes. Fundamentals may call for lower returns but those can come as 10+ more years of excellent returns, then no returns or a crash. The plan for long term passive investors is to have their assets in the market, ready to take advantage of all the rises, whenever they happen.
Of course, it’s also possible that those returns be achieved with one big crash right now, then good returns, or seemingly flat returns for an extended period of time. Be prepared for all by choosing an asset allocation that you can keep under all conditions and then keep it.
@Abs_max @Tony1337 @oslasho do you own any fixed income? If so, would you mind sharing what you have? I’ve only stocks and crypto and would like to diversify into lower beta assets like FI. Many thanks!
Most of my fixed income investments are part of 3a and 1E plans. So the funds used are the ones which are used by Finpension. They comprise of Swiss bond funds and International CHF hedged bond funds.
I didn’t really choose myself. Just went with whatever standard offering selection was
Because as per vanguard‘s philosophy, crypto is speculation and not an investment.
So since they cannot predict the returns , I think they chose not to talk about it or offer it as an alternate to their investors
That holds for all their predictions. They’ve been predicting low returns for the US market since ages. To credit them, I’ve also been predicting low US returns 
but luckily did not act upon those predictions and stayed global MCW.
The truth is that markets are dominated by randomness and noise. But I believe with the current price level (CAPE of 36) we should not expect 10% (6,7% real) annual returns going very long term.
I would say not being correct is a bit different than not being able. To predict returns, they need to believe in the asset as investment. And based on the interview, they don’t believe in BTC as investment.
Expected return us for planning. Actual returns is to live with 
Their predictions are pretty bad from memory.
Generally speaking, not even bothering opening the link, believing in market cap weight and being 100% equities for the next 10-12 years is my plan. Bogle himself said ignore the noise, buy the haystack, do nothing 
Hi guys, it is interesting and I assume that the prediction is counting on USD/CHF dropping in long term.
I currently hold VOO, IJR, VEA, QQQM and IEMG. Could you suggest some alternatives traded in CHF to those? I just found this https://www.ishares.com/ch/privatkunden/de/produkte/251406/ishares-sp-500-chf-hedged-ucits-etf
You have strong opinions on USD/CHF? Buy a futures contract at CME through IBKR.
Just to be sure . You are looking for currency hedged alternatives or just CHF denominated ETFs? They are two different things.
If an ETF is just denominated in CHF is not going to change anything.
But if an ETF is hedged to CHF then it would improve or reduce the overall returns. But it’s difficult to know which way the strategy of hedging would work. Someone asked similar question sometime back. You can read the postHere
Thanks for suggestion, I actually do not have much experience with futures but I know about the option to hedge this way but I need to study a bit.
I am searching for CHF hedged ETF, thanks for the post, there is a UBS product mentioned that has lower fees then iShares.
Good luck
I guess you meant the following UBS ETF which tracks S&P 500 and hedged to CHF right?
IE00BD34DB16
Or you mean the UBS ETF which tracks MSCI world and hedged to CHF
IE000N6LBS91
The first one, exactly!
WRT currency hedging, here are two Swiss articles that are not completely opposed to it:
Improve your long-term returns with currency hedging – True Wealth
TLDR: hedging reduces volatility so it’s good for risk-averse investors. Also because the loser loses less than the winner when hedging (?), it makes sense to hedge 50% of the portfolio
End of zero interest rates: Check hedging foreign currency investments now! – ZKB
TLDR: hedging makes sense when interest rate difference is lower than 1%, so fully hedge investments in EUR and JPY.
The second article makes more sense to me than the first purely because charts + numbers = yay. So just hedge Europe and Japan and don’t bother with the rest?
