Swiss real estate funds have delivered an excellent performance in 2025, rising by nearly 9% since the beginning of the year. Furthermore, seasonality plays in their favour, as the months from November to January have historically been the most supportive. This momentum is largely explained by their fiscal appeal: these funds are excluded from the taxable assets of holders at year-end, making them particularly attractive to Swiss private investors.
Real estate fundamentals remain sound, underpinned by continued population growth and a limited supply. In terms of valuation, premiums are rising and currently stand at 36%, a high level, albeit still below the 44% record observed in 2020.
We therefore maintain a constructive view on this asset class, which should continue its positive trajectory, especially given that a rate hike in Switzerland appears unlikely in the near future.
The recent developments in the Swiss franc on the foreign exchange market reflect a contrasting dynamic between long-term structural factors and more immediate cyclical influences. Over the medium to long term, the franc retains the characteristics of a structurally appreciating currency: institutional stability, recurring external surpluses, robust public finances, and the continued attractiveness of Switzerland’s financial center. These elements have, for years, provided lasting support for the currency and reinforced its status as a safe haven.
In the short term, however, this upward trend may be reaching a form of ceiling. The Swiss economy, which is heavily reliant on international trade, is facing a less favourable global environment. Ongoing trade tensions between the United States and several of its commercial partners continue to generate uncertainties from which Switzerland cannot fully insulate itself. Admittedly, the recent easing of certain US tariffs, reduced from 39% to 15% for specific Swiss exports, is a step in the right direction. Nevertheless, this adjustment is insufficient to offset the deterioration in global demand and the persistent disruptions in international supply chains.
The 0.5% contraction in Swiss GDP in the third quarter of 2025 underscores this fragility. Export-oriented sectors, traditionally the engines of Swiss growth, are seeing their margins squeezed, both by the global slowdown and the elevated level of the franc, which erodes their competitiveness.
In this context, the Swiss National Bank (SNB) is maintaining a monetary strategy explicitly aimed at curbing the strength of the currency. With inflation remaining firmly under control, just 0.1% year-on-year in October, the SNB retains significant leeway to sustain a zero-interest-rate policy. This accommodative stance reflects the SNB’s clear intention to avoid a renewed episode of excessive franc appreciation, which would further strain exports.
Additionally, the possibility of discreet SNB interventions on the currency market cannot be ruled out. Over the past twelve months, the EUR/CHF pair has consistently rebounded whenever it approached the support level around 0.92. This pattern may suggest targeted sales of Swiss francs in favour of the euro, aimed at discouraging further appreciation of the franc.
Thus, while the structural strength of the Swiss franc remains intact, the current economic environment argues in favour of a short-term stabilization phase.
After several weeks of uncertainty, markets are once again anticipating a cut in the Federal Reserve’s key interest rates in December, with a probability of 100%. The rise in unemployment fully justifies a monetary policy easing in the United States, especially as inflation appears relatively stable at 3%.