07.05.2026, Dr. Luzius Neubert, Pascal Bur
The answer is simple: yes. However, it is important to stay focused in a volatile geopolitical environment and despite the overwhelming range of investment products. This article shows how to invest successfully in a simple and cost-efficient way.
Professional investors follow a clear investment process. Private investors can also use this as a guide – regardless of whether their investment target is CHF 100,000 or CHF 100 million.
Step 1: Define an investment strategy
Why do we need an investment strategy?
An investment strategy refers to the allocation of assets to individual asset classes (bonds, equities, real estate, equity stakes, etc.). They are weighted so that investors can maintain their allocation over the long term and achieve an adequate return regardless of the economic and geopolitical situation.
An investment strategy is needed because short-term forecasts on the financial markets are virtually impossible and only a stable long-term asset allocation is likely to be successful.
The investment strategy is defined for all assets held for the purpose of generating a return (securities, investment properties, participations, etc.). Assets that serve other purposes (own home, vacation homes, cars, art, etc.) are not taken into account.
What should the investment strategy depend on?
An important basis for determining the investment strategy is the required return (target return). To determine this value, the uncovered future expenses (cost of living, taxes, inflation, etc. minus income from work and pensions and planned capital consumption) are compared to current assets.
The investor’s risk capacity and risk appetite are just as important. Factors relevant to risk capacity include, among other things, the minimum assets to be preserved (any lower limit) and the investment horizon. The risk appetite can be derived from the investor’s expertise, experience and risk tolerance.
The expected return on the strategy should be sufficient to meet or exceed the required return without overstretching the investor’s risk capacity and appetite. A good strategy is made up of several different asset classes. This avoids concentration risks and reduces the risk of loss. The liquidity and availability of efficient investment products must also be taken into account.
How do you define an investment strategy?
In order to select a strategy, several strategy variants are usually compared on the basis of key figures such as expected return and risk (volatility).
To better illustrate the risks, it is helpful to show what losses would have resulted from a severe crisis – such as the subprime crisis of 2007 – 2009. This helps determine whether an investor is prepared to use this strategy to adhere to the strategy during downturns.
Finally, the selected strategy is supplemented with bandwidths (minimum and maximum share of an asset class) and benchmarks (specific comparative index for measuring returns).
⯈Strategy calculations, including the necessary risk/return assumptions, are available free of charge from banks, asset managers and on the internet. However, these providers may also pursue other interests. By determining the risk/return assumptions, they influence the decision on what to invest in (e.g. investments on which above-average fees are charged). It is therefore recommended to obtain independent, fee-based strategy advice from a provider who is not also an asset manager.
Step 2: Determine an efficient implementation
Before proceeding to the selection of asset managers, the implementation of the investment strategy must be determined.
On the one hand, it is important to decide how involved you want to be in asset management as an investor:
- Do you issue an asset management mandate (e.g. to a bank), or do you buy collective investments (e.g. investment funds) yourself [1]?
- Is a specialised investment controlling company mandated to monitor the investments (asset structure, tactical bandwidths, performance, fees, asset managers or collective investments)?
On the other hand, the details of implementation must be defined:
- Mandate type: Mixed mandate (several asset classes in one mandate) or category mandates (one investment category per mandate).
- Active vs. passive (indexed): An active implementation aims to outperform the benchmark index, while a passive implementation aims to replicate the benchmark index in a cost-efficient manner.
- Number of mandates: How many different asset managers should be commissioned with the asset management?
- Sustainability: Should asset management take special account of environmental, social and governance aspects?
Alongside strategy, these implementation issues generally have the second largest effect on the return, risk and fees of asset management. Only once these issues have been resolved can a specific mandate be tendered.
⯈ Especially for private investors with assets under CHF 10 million, it is worth paying close attention to low asset management costs and implementation closely aligned with the strategy. Therefore, the focus is on indexed mixed mandates or indexed funds. Therefore, the focus is on indexed mixed mandates or indexed funds.
[1] The selection of individual securities by private investors is not recommended due to a lack of diversification.
Step 3: Select the right asset manager
In order to select a suitable asset manager [2] or an investment product (e.g. investment fund), a tendering process is usually carried out. The strategy and implementation (see above) must already be known before launching the tender, and mandate guidelines must be drawn up on this basis.
In the context of tenders, the question of whether to contact the private banking or asset management unit of a particular institution is often central. While in private banking the focus is on the personal relationship with the client advisor and often does not include detailed guidelines or specific reporting with benchmarking, investment solutions in asset management are usually cheaper and more professional, but less personal.
A tender is often carried out together with a consultant in the following steps:
- Market screen: Provides an overview of the available providers and enables an initial selection of suitable candidates.
- Tender: The most suitable asset managers will be contacted with details of the investment guidelines and are asked to submit a list of questions as part of their offer. The offers are evaluated on the basis of objective criteria and the results are discussed.
- Offer presentation: The candidates with the best offers are invited to present their offers. In a personal meeting, the investor gets to know the potential advisors, can clarify any final questions and then make a decision.
- Negotiations: Following the decision, the asset management agreement is drawn up, and the transfer of assets (transition) is planned.
⯈ In addition to strategy and implementation, the right choice of the asset manager is another important step towards professional investment activity. It is not enough to simply invite several banks or asset managers. In order to be able to compare the offers, they must be based on the same strategy and implementation. It must also be ensured that the providers specialise in the investment solution put out to tender (e.g. indexed mixed mandates or sustainable investments).
[2] The term asset manager does not refer to a specific person, but to a company.
Step 4: Monitor the investments (investment controlling)
Once the assets are invested, periodic investment controlling is recommended. In an independent report, e.g. quarterly, the investment controller answers questions such as:
- Strategy conformity: Does the asset manager adhere to the investment strategy (compliance with tactical bandwidths)?
- Performance measurement: Is it just the markets that are performing poorly or is the asset manager (benchmarking) responsible as well?
- Peer group comparison: How did you, as an investor, perform compared to other investors?
- Fees: Are the fees in line with the market and have they increased since the tender (e.g. due to the use of unwanted collective investments)?
- Stability of the asset manager: Have there been any changes at the commissioned institute (e.g. departure of a key team)?
⯈ The investment controlling report covers these and many other topics. Possible measures are discussed together with the investor.
Quick Check: Am I already investing professionally?
By answering the following questions for yourself, you can determine whether you are investing professionally:
- Is my portfolio based on a specific investment strategy (asset allocation)?
- Do I know what losses to expect in a crisis?
- Have any actively managed funds and structured products added value to my portfolio?
- Do I know my asset management costs (custody account fees, transaction costs, management fees, fund fees, etc.)?
- Did I obtain several offers when I chose my bank/asset manager?
- Do I know the actual return achieved by my portfolio and do I have a benchmark that is tailored to my strategy?
