In 2024 April certainly lived up to its meteorological reputation, with considerable temperature fluctuations as well as showers of rain, snow and sleet. On the stock market too, it was an uncomfortable month following a strong first quarter. Geopolitical tensions along with doubts about the turnaround in interest rates dampened the markets, while profit-taking in technology stocks, which had previously performed especially well, did the rest. This correction was also felt by the FUW Swiss 50 Index. Designed by "Finanz und Wirtschaft" magazine (FuW), this benchmark contains the 50 biggest listed companies in Switzerland as measured by their free-float capitalisation. "FuW developed this index because the SMI published by the stock exchange is not a good indicator of the Swiss economy from the point of view of an investor," said the editors when explaining the idea behind this barometer.
The FUW Swiss 50 Net Total Return Index went live on 18 August 2022. In the good 20 months that have elapsed since then, the select 50 have performed about 400 basis points better than the SMI in its total return variant. Almost a third of the 12.3% increase in value achieved since the launch can be attributed to the dividends of the companies included. The deadline for receiving this year's profit share from Sandoz is 3 May. The generics manufacturer is returning to the FuW Swiss 50 Index one day beforehand – just in time, then, for the distribution to be reinvested in this position. The Novartis spin-off brings plenty of momentum to go with the dividend: Sandoz recently received EU approval for the biosimilar Pyzchiva (ustekinumab). The generic drug can now be used as a biological therapy in the fields of gastroenterology, dermatology and rheumatology. Sandoz described the approval as an important step in driving its growth strategy. Investors appear to take the same view, with the share climbing to an all-time high following the announcement.
In March Comet reached its highest level since the start of 2022, when the mid cap was riding the wave of AI enthusiasm. As a supplier to the semiconductor industry, the industrial group is regarded as a potential beneficiary of the growing importance of artificial intelligence. The hype at the turn of the year has not yet been reflected in the figures, after Comet reported a 24.8% drop in revenue for the first quarter to CHFmn 80.9. Its management has spotted signs of improvement, though, with the book-to-bill ratio, for instance, standing at 1.09 in the first quarter. This means that orders were higher than sales. Comet also sees the increased utilisation of existing production capacities, falling inventories and rising selling prices for semiconductors as indicators of a recovery in the sector. Although the x-ray line is weakening, the Freiburg company is standing by its forecast: while sales are expected to reach between CHFmn 440 and 480, the board is targeting an EBITDA margin of 15% to 17% for the year as a whole. To compare, in 2023 income came to just under CHFmn 400, of which 11.3% remained in the operating result.
One order is sufficient to add the FuW Swiss 50 Net Total Return Index in its entirety to a portfolio. Leonteq is enabling investment in the diversified benchmark for the Swiss equity market with an ETP+. This allows investors to take a position in a particularly robust product wrapper, a pledge being deposited with SIX SIS AG for the ETP+. The depositary agent gives investors access to these funds in the event of the issuer becoming insolvent. Measures are also taken to ensure that the collateral is sufficiently large: SIX Repo AG undertakes a daily review and valuation of the securities. Leonteq's balance sheet suggests there will be no need for the mechanism just outlined. At the end of 2023 the capital base – equity and deferred income – totalled almost CHFmn 840. Leonteq Securities also boasts an investment grade rating (BBB, stable outlook) from the agency Fitch and is regulated by FINMA. Another "+" point of the ETP presented is Leonteq's long track record as an issuer of structured products.
As of now there is another ETP+ on the FuW Swiss 50 Net Total Return Index. Leonteq has joined forces with neon, a challenger of traditional Swiss banking, to launch the product in a smaller denomination. Whereas the original ETP+ is trading at approximately CHF 30, the price for the new issue is around CHF 6. It is important to bear in mind that this does not make the index itself any cheaper. Rather, the conversion ratio has been adjusted in order to push down the absolute price. Leonteq and neon are taking this step in order to make the FuW Swiss 50 Index eligible for savings plans. Investors can pay the desired sum in at regular intervals. In return they receive a certain number of ETP+s, depending on the price at the time. If the index is trading at a high level, relatively few are added to the portfolio. By the same token, savers buy a larger number when they are trading lower. Known as the cost-average effect, this allows the creation of an anticyclical portfolio where market timing plays a subordinate role. The new ETP+ on the FuW Swiss 50 Net Return Index is quoted on the BX Swiss.
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