Insights for investors

On the capital markets, a single stroke of genius rarely decides the outcome. It is far more often about avoiding large mistakes and staying consistent for many years. Anyone investing wealth encounters the same pitfalls again and again.

Where investors lose money

• Chasing trends. Investors who only buy once an asset is on everyone’s lips often pay high prices.
• Market timing. Hardly anyone gets entry and exit points right over the long term. Selling in weak phases locks in losses and misses the recovery.
• Too little diversification. A single company, sector or country then determines the entire result.
• High costs. Fees are charged every year, including years without returns. Over long periods they add up considerably.
• Too much activity. Frequent switching causes transaction costs and often follows emotions rather than a plan.

What successful investors do differently

• They put a plan in writing and only adjust it when their personal situation changes.
• They diversify across asset classes, strategies and managers.
• They watch costs and ask what they receive in return.
• They limit losses. This is no side issue: after a loss of 50%, a gain of 100% is needed to get back to the starting value.

Our approach

At Swiss Three we pursue absolute return targets instead of a benchmark and keep turnover low. Preserving capital comes first. There is no guarantee of investment success; every investment can lose value.

Anyone who wants professional care for their wealth has a choice: the bank and its advisory service, or an independent asset manager. Both have their place. What matters is knowing the differences.

Who does what?

With an independent asset manager, your assets stay with a custodian bank in your name. The bank safekeeps securities and cash. The asset manager makes the investment decisions under a power of attorney. As a rule, they may not initiate payments or withdrawals. Custody and management are thereby separated.

Safety

Custodian banks in Switzerland are supervised by FINMA. Securities held in a custody account are, in principle, treated as the client’s property if a bank becomes insolvent. Cash is covered by the deposit protection rules. Ask your bank to explain its specific arrangements.

Differences at a glance

• Product selection. Banks often recommend their own products. Independent asset managers can look at the whole market.
• Remuneration. With an asset manager you usually pay a management fee and, where applicable, a performance fee. The custodian bank’s fees come on top.
• Client care. Smaller firms often offer fixed contacts and short lines of communication.

Questions to ask every asset manager

• How are you paid, and do you receive compensation from third parties?
• Which bank holds my account, and in whose name is it?
• Which supervisory organisation are you affiliated with?
• How do you select investments, and how do you measure performance?
• Can I terminate at any time?

Private debt refers to loans that are not traded on an exchange. Examples include trade finance, factoring, real estate bridge loans and personal loans. Investors usually access them through funds.

Why private debt can fit into a portfolio

• Interest income. Returns come mainly from interest rather than price gains.
• Diversification. Performance does not necessarily move in step with equity markets.
• Short maturities. Some strategies finance transactions that settle within a few months.

The risks

• Credit risk. Borrowers can default, and collateral can be worth less than expected.
• Liquidity. Funds sometimes have redemption notice periods. An immediate sale is not always possible.
• Valuation. Values are not set daily on an exchange.
• Manager and concentration risk. The quality of management and the spread of the loans are decisive.

How we deal with this

We review every fund qualitatively, quantitatively and organisationally, including references and background checks. Private debt is one building block among several and is weighted according to strategy and risk profile. Preserving capital always has the highest priority. Losses, up to and including the total loss of individual positions, are nonetheless possible.