We believe that one of the main problems we face today is that the current financial and monetary system is decoupled from the real economy. Consequently, the solution is to bring the two back together.
Money must be anchored to assets that have a connection to the real economy if its core functions are to be permanently preserved and if today’s aberrations are to be rectified.
Following the introduction of the euro, we thought long and hard about different possibilities and considered various ways of backing a currency. The “RealUnit” emerged as the most effective, efficient and sustainable. We became convinced that an optimal currency should be backed not only by gold, but rather by productive capital goods that are important to the underlying economy.
The concept of the RealUnit is therefore based on the idea that a stable currency should be backed by capital goods that ideally move in lockstep with the real economy. The results would be more stable money and more tame, smoother business cycles – both developments being in the interest of the general public.
The RealUnit is based on the idea that the real value of a currency can only be maintained if it can (at least) keep up with the economy on a long-term average basis.
This allows the currency holders to consume the same share of the economy over time, thus ensuring the preservation of real purchasing power. At the same time, such a store of value leads to a smoothing of business cycles and thus to a stabilization of the national economy.
|RealUnit NAV performance||Swiss GDP growth, adjusted*|
Sources: RealUnit Schweiz AG / The RealUnit investment strategy has been implemented in various forms since 2001. 2001-2009: Private portfolio of Karl Reichmuth, 2010-2017: Swiss investment funds, 2017-2022: RealUnit Schweiz AG. The average of the five largest balanced funds of Swiss banks is used as a comparison (source Reichmuth + Co.) The performance of the RealUnit before 2017 is based on backtesting calculations.
The RealUnit’s investment strategy has been continuously tested, adjusted and optimized over the span of two decades. Its performance clearly shows that the RealUnit, with its focus on real assets such as precious metals and the hedging of equity investments, offers significantly better value preservation in times of crisis than the average of the largest Swiss balanced-strategy funds, even in the event of sharp corrections in the stock markets. It’s crisis resilience was successfully demonstrated during three strong stock market corrections:
1. The financial crisis 2008/2009: In contrast to comparable funds with a balanced strategy (-22.2%), the RealUnit suffered a much smaller loss (-13.4%) and also rebounded to its pre-crisis level much faster (after 24 months, compared to 76 months).
2. The covid pandemic 2020: The funds recovered from their massive drop in April 2020 and recorded a performance of Ø +2.1% in 2020. The RealUnit, on the other hand, delivered a much higher annual return of +5.4% in this crisis year.
3. Ukraine War in H1 2022: Rising inflation worldwide and the outbreak of the war triggered another correction in the markets. The RealUnit again proved crisis-resistant with a loss of only 2.9% in H1 2022. The benchmark funds lost 14.6% in value during the same period.
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