Investment company seeks to protect capital from inflation

11. May 2022

Article in schweizeraktien.net about RealUnit Schweiz AG.

Published: 11.5.2022 at schweizeraktien.net

For almost two years, the word “inflation” has been increasingly circulating in the media. Now it is real. Inflation rates of up to 8% in the U.S. and the Eurozone, and rising to more than 2% in Switzerland, are causing savers in particular to shudder. After all, funds in savings accounts have long ceased to yield a return, and often rates are still at zero, depending on the amount of one’s assets. For the investor, this means a real loss of capital.

Dani Stüssi (CEO) and Fidelis Götz (VRP) on the occasion of the listing on the BX Swiss in November 2021

GDP growth as a benchmark

This can be remedied by investments in asset classes such as real estate, company shares and commodities – also known as “real assets”. The portfolio management of RealUnit Schweiz AG, whose shares have been traded on the BX Swiss since November 30, 2021, is based precisely on this investment approach. “Our focus is primarily on long-term inflation protection, crisis resistance and an annual return that exceeds Switzerland’s GDP growth,” explains CEO Dani Stüssi in an interview with schweizeraktien.net. In doing so, the company relies on a portfolio mix of equities, physical metals, physical cash and a small allocation in cryptocurrencies. Real estate is covered by investments in real estate companies. At the end of March 2022, the equity ratio was 40%. According to their investment guidelines, no more than half of the portfolio may be invested in company shares.

Precious metals and cash outside the banking system

The second largest position, 35% of the portfolio, is comprised of physical metals such as gold and silver. Cash in Swiss francs follows in third place. The most striking aspect of the portfolio composition is that investments in precious metals and cash are physical and stored outside the banking system. The main purpose of this is to have access to the assets in the event of a crisis, Stüssi explains. Cash and precious metals are held in specialized high-security warehouses. “However, we make sure that the assets are available within a maximum of three days and can also be sold,” the CEO said. Precious metal holdings and cash outside the banking system should comprise at least 50% of the portfolio.

  • Physical metals* (40%)

    - Primarily physical gold and silver
    - Various physical industrial metals

  • Shares (32%)

    - Focus on listed shares from Switzerland
    - Solid companies with crisis-resistant business models and long-standing dividend policies

  • Swiss Francs (physical)* (12%)

  • Nominal assets (8%)

  • Alternative investments (7%)

    - Unlisted shares and alternative funds

  • Crypto (1%)

*stored outside the banking system in Switzerland
Balance as of 12/31/2022

Swiss equities dominate the portfolio

For stock selection, Chief Investment Officer Vahan P. Roth relies on the expertise of an investment committee that includes banking expert Hanspeter Leimgruber and family office founder Erwin Röösli as external experts. Here, too, clear criteria apply to an investment decision , such as the companies’ resistance to crises, a consistent dividend policy, a healthy balance sheet and sustainability considerations. “We invest in companies that have been paying regular dividends for many years and have a business model that is in demand even in a recession or crisis,” Stüssi makes clear.

At least 60% of the company’s investments are to be made in Switzerland. Currently, that figure is around 85%. Equity investments include companies such as Bucher Industries, Novartis, Roche, Holcim and also the unlisted WWZ Group.

More than an investment company

With its listing on the BX Swiss, RealUnit Schweiz is now addressing private investors directly. Until this step, investment was open to qualified investors only, Stüssi explained. Behind the investment company is a vision that the Lucerne banker Karl Reichmuth, founder and main shareholder (approx. 30%) of RealUnit Schweiz, first conceived of back in the late 1990s and later implemented. The idea is to create a currency backed by real assets, as was the case with the gold standard for the U.S. dollar until 1971. In the RealUnit – the name of the envisaged parallel currency – in addition to gold, other real assets also serve as a safeguard for stability.

Over 20 years, Karl Reichmuth and Vahan P. Roth developed and refined this concept; first in Reichmuth’s private portfolio and later as an investment fund. A comparison with the five largest Swiss portfolio funds shows that the RealUnit’s investment strategy performed significantly better during this period. This trend is now continuing with the RealUnit Schweiz shares. Since the beginning of 2021, the share price is up almost 5%, while the major Swiss indices such as SMI and SMIM have lost value. In this context, the listed bearer share is always quoted slightly above the level of the net asset value (NAV), which is published on the homepage every trading day. The idea of a currency backed by real assets is also being pursued further at RealUnit Schweiz. It will soon be possible to buy RealUnit shares not only on the BX Swiss, but also in digital form, as share tokens. “If you then keep your RealUnit in your own wallet, you can theoretically transfer it to other people,” says Dani Stüssi. Due to the intrinsic value of the RealUnit portfolio, the RealUnit could not completely lose its value, unlike cryptocurrencies: because it is backed by shares, precious metals and physical cash.

Conclusion

The Corona pandemic, the Ukraine war and a sharp rise in inflation are currently fueling fears of capital losses. Therefore, RealUnit Schweiz AG strikes a chord with many private investors. Their strategy also has the added advantage that it has been tried and tested for over 20 years and has since been refined time and again. Still, investors should also remember that the prices of gold and silver can fall just as sensitively as a well-balanced equity portfolio. In addition, costs are incurred for managing the currently around CHF 23 million worth of assets of RealUnit Schweiz and this weighs on performance. A marketing subsidy from company founder Karl Reichmuth currently still ensures that the administrative costs have so far stayed below 1% of the assets under management. To ensure that this remains the case in the future, RealUnit Schweiz AG must grow rapidly in the coming months and increase assets under management. Further capital increases are also planned.

Thanks to the sophisticated investment strategy, it is very possible that RealUnit shares offer good protection for capital preservation in the current situation. Currently, the shares are trading close to the NAV of CHF 1.12 on the BX Swiss. As RealUnit Schweiz AG is an investment company, investors must be aware that, unlike in the case of an investment fund, the share price can also deviate more strongly from the NAV and trade at a discount. For those who are aware of these risks and do not wish to manage their assets themselves, the purchase of RealUnit Schweiz shares is an interesting alternative to other investments. Since capital protection and the long-term preservation of purchasing power are paramount, no large short-term price gains should be expected.

BX TV: Auswirkungen der Inflation - TV Interview

BX TV: Effects of inflation – TV interview

Video Interview with Dani Stüssi on the impact of inflation, published on 8.9.2022 on BX TV. In the interview on BX TV, Dani Stüssi, CEO of RealUnit Switzerland AG explains how investor demand has changed due to inflation and what makes RealUnit Switzerland AG special.

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