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Swiss assets earn foreign investors fat returns in 2011

Swiss assets earn foreign investors fat returns in 2011

Foreign investors' holdings in Swiss assets netted them strong returns in 2011 as the country's domestic investors suffered low returns from their foreign investments, according to data by the Swiss National Bank published on Thursday.

The Swiss market saw foreign investors earn CHF 20 billion (€16.6 billion) last year. This was driven mainly by a strong Swiss franc and investors' continued demand for the currency, despite measures by the central bank to curb the currency's appreciation in September last year.

By comparison, the report revealed Swiss investors purchased mainly foreign shares and money market instruments which earned them a net return of CHF 3 billion (€2.5 billion) investors in 2011.

The Swiss central bank continues to battle with an appreciating currency amid the euro crisis and said on Thursday its current account surplus declined by CHF 20 billion (€16.6 billion) to CHF 62 billion (€51.2 billion) in 2011.

This is one positive sign towards a weakening of its currency as while the Swiss franc is regarded as a safe haven amongst foreign investors, the report reveals its appreciation was a strong a headwind for Swiss investors abroad last year.

Speaking to Citywire Global at the end of last year, Andrea Guzzi at IST Investmentstiftung in Zurich said Swiss pension funds were faced with increased headwinds in the diversification of their portfolios.

This was due, he said, to declining global equity markets as well as foreign currencies' strength declining against the Swiss franc.

The SNB President Thomas Jordan has pledged to enforce the Swiss franc cap of 1.20 against the euro citing ‘unlimited purchases of foreign currencies if needed.’

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