The advice sounds unimpeachable: buy a low-cost world index, hold it for forty years, ignore the noise. And it mostly is. But there is a line in the fine print that nobody reads to a Swiss investor, because the people giving the advice are usually American. A “world” index is not evenly spread across the world. Roughly seventy percent of it is US companies, which means roughly seventy percent of your money is really a bet on the US dollar. And the dollar has spent your entire lifetime, and your parents’ entire lifetime, losing ground to the one currency that actually pays your rent: the Swiss franc. The headline return you read about is earned in dollars. You live in francs. The gap between those two numbers is a cost, it is invisible, and it is being charged to you every single year.
The franc is the strongest currency you’ll ever be paid in
Start with the raw fact, because it is almost hard to believe. When the world abandoned fixed exchange rates in 1971, one US dollar bought about 4.31 Swiss francs. In June 2026 it buys roughly 0.80 (Wise, June 8, 2026). The dollar has lost more than four-fifths of its value against the franc in a little over fifty years. Run that down to an annual rate and the franc has appreciated against the dollar by roughly three percent a year, decade after decade, through every cycle. No other major developed-market currency has held its purchasing power like it.
Now translate that into felt cost, because three percent sounds like a rounding error. From 2000 through 2021 the S&P 500 returned about 7.5 percent a year including dividends (The Motley Fool). That is the number an American brags about at dinner. A Swiss investor who held the exact same index over a similar stretch did not earn 7.5 percent. Every year, a slice of that return was quietly handed back at the currency exchange as the dollars those stocks were priced in bought fewer and fewer francs. The same shares, the same dividends, the same good companies, and a return in francs that lagged the headline by something close to the franc’s appreciation rate. You owned the win and collected a smaller one.
Why the franc keeps winning
This is not luck, and it is not a fluke that will quietly reverse the year you retire. There is a mechanism, and naming it matters. The textbook version is the Balassa-Samuelson effect: a country whose export industries are highly productive (pharma, precision machinery, finance) tends to see its currency strengthen in real terms over time . Switzerland is the cleanest example on earth. Layer on two more forces: a persistent trade surplus that creates a constant background demand for francs, and the franc’s status as the money the whole world runs to in a crisis. Swiss inflation has also run far below America’s for years, recently near 0.3 percent (Swiss National Bank), so the franc loses less to inflation at home even as it gains abroad. The strength is structural. Betting on it to stop is betting against the things that make Switzerland Switzerland.
Two ways to stop bleeding francs
The instinct here is to panic and sell everything American. Don’t. Global diversification is still right; the dollar exposure is a price worth paying for owning the best companies in the world, and in a crisis the franc’s safe-haven strength actually cushions your losses. The goal is not to flee the dollar. It is to stop overpaying the drag where it is cheap to fix. There are two clean levers, one for each half of a core-satellite portfolio.
- Hedge the core.Your broad index sleeve, the part that is pure diversification rather than a specific bet, can be held in a CHF-hedged share class. These exist and they are cheap: the iShares S&P 500 CHF Hedged UCITS ETF charges 0.20 percent a year (justETF), and UBS’s CHF-hedged S&P 500 ETF runs just 0.06 percent (justETF). The hedge is not free, you pay the interest-rate gap between the two currencies, but on the index sleeve, where you have no view on any single company, removing the FX noise is usually worth it.
- Earn francs in the satellite. The cleaner hedge costs nothing, because some companies already earn in francs or in currencies that track them. A Swiss or European business that sells into its home market, books revenue in francs or euros, and pays its people the same, is a natural FX hedge built into the stock itself. Owning a few of those alongside your US winners pulls your effective currency exposure back toward the money you actually live on, without a single forward contract.
Where Obermatt fits
That second lever raises an obvious question: which Swiss and European companies are actually worth owning, rather than just owned because they happen to print francs? A bad business is not a hedge, it is a loss with a Swiss flag on it. This is where a fact-based approach earns its keep. Obermatt ranks companies on fundamentals (profitability, value, growth, safety) and scores each one relative to its true peers, on a scale from 0 to 100, so a rank of 75 means a company outperforms 75 percent of its direct competitors. The Swiss and European coverage lets you screen the franc-and-euro-earning names the same way you screen the American ones, on the numbers, not on the passport. The currency advantage is the reason to look at them. The rank is how you decide whether any single one deserves a place.
The principle
The deepest version of this is simple. Measure your wealth in the currency you will actually spend it in. The brochure return, the dinner-party number, the figure the finfluencer screenshots, is almost always a US-dollar number, and you are not American. None of this means abandoning the world’s best companies, and the franc’s strength is itself a quiet form of safety, so this is a cost to manage, not a crisis to flee. The one concrete action: the next time you check your portfolio, look at the return in francs, not dollars, and decide whether your core belongs in a CHF-hedged share class. The drag is real and it compounds. The good news is that, once you can see it, it is one of the cheapest costs in all of investing to fix.