BONHÔTE — Swiss Equity Momentum

The fund is aimed at investors seeking:

• broad and diversified exposure to the Swiss equity market
• an alternative to purely passive management
• structured active management that aims to outperform the market over the medium and long term, while seeking to limit tracking error relative to the Swiss equity market (SPI®).

Investment objective

The fund aims to deliver outperformance over the medium and long term relative to the Swiss equity market, as represented by the SPI® benchmark index. 

Investment approach

The strategy is based on a systematic and quantitative approach, combining:

• a primary factor: momentum
• complementary factors: fundamentals, social and governance (S&G).

Index constituents are overweighted, underweighted or excluded based on signals generated by the quantitative model.

The objective is to identify companies with:

• favourable share price momentum
• a solid balance sheet
• effective governance and human capital management

Institutional investors are increasingly investing in factor-based approaches—what exactly are they?

Factor-based selection has been the subject of academic research for years.

A factor is, therefore, a set of criteria for selecting securities. The securities that best meet these criteria are systematically selected to form an exposure known as “factor-based.”

Two factors are particularly interesting: the QUALITY factor and the MOMENTUM factor, which is especially well-suited to the Swiss market.

The Quality factor involves selecting securities based on criteria of excellence in financial strength.

The Momentum factor, on the other hand, involves prioritizing securities with favorable price momentum based on specific parameters.

What should you pay attention to when implementing a factor-based strategy?

The success of a factor-based strategy rests on three elements:

1. First, the choice of selection criteria: which criteria, over what time period, and for which market.
2. Second, the selection process must be 100% systematic; there is therefore no room for emotion.
3. Finally, the entire process must be repeated at regular intervals to get the most out of the strategy.

In the Swiss market, what are the advantages compared to holding only Nestlé, Roche, and Novartis?

The Swiss market has changed significantly over the past 15 years.

The three giants of the Swiss market accounted for nearly 50% of the index 15 years ago, but now account for only 37%.

Nestlé’s weight, for example, has been cut in half over the past 15 years, while Richemont’s has more than doubled over the same period.

Every year, certain stocks deliver incredible returns:

Holcim rose 80% in 2025, UBS 55% in 2023, and Richemont 75% in 2020.

The weight of these stocks in the index is by no means negligible. Not holding them poses a major risk of underperformance.

This is precisely the advantage of a momentum-based strategy. It involves holding a large number of stocks and overweighting or underweighting them relative to their weight in the index based on their price momentum.

The role of Swiss equities in an investment portfolio

Swiss equities form the cornerstone of a long-term equity allocation. 

They offer a combination of stability and quality. Robust balance sheets, respected governance and a tremendous capacity for innovation are the hallmarks of Swiss companies, with a significant portion of their revenue generated abroad.

As part of a diversified portfolio, Swiss equities bring defensive and resilient qualities, while providing full exposure to global economic growth.

Factor investing an alternative approach to analysing equity markets

Factor investing is based on a simple, well-documented principle: additional returns can be captured by systematically investing in a range of securities sharing specific common characteristics, known as “factors”.

The factor-based approach involves systematically investing in companies sharing similar attributes, such as their size, valuation or the quality of their fundamentals.

One of the primary strengths of this approach lies in its empirical foundation. These factors have been repeatedly observed over extended periods and across various markets, which means they are underpinned by robust academic and historical evidence.

Another core component is discipline. Investment decisions can be influenced by emotions, recent experiences or personal convictions. A factor-based strategy, by contrast, applies predefined rules consistently and transparently. This methodology ensures that decisions are anchored in objective and measurable criteria.

The momentum factor allows for capitalising on price dynamics

Financial markets are not perfectly efficient. 

Extensive academic research demonstrates that securities with strong recent performance tend to sustain this trajectory over a given period. This phenomenon is known as “momentum”, and is driven by several mechanisms:

• Investors tend to take positions in rapid gainers for fear of missing out on an opportunity.
• Institutional investors regularly adjust their port folios to reflect the growing weight of outperforming securities within benchmark indices.
• Analysts gradually revise their price targets upwards as market prices rise.

Momentum is currently one of the most extensively researched and widely utilised investment factors among institutional investors.