GAM Swiss Sustainable Companies

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GAM Swiss Sustainable Companies invests in small- and medium-sized Swiss companies. The investment strategy is based on the conviction that investment returns are a result of the companies’ success over time. Therefore, the strategy focuses on firms that have a clear vision, customer-driven innovation and consistent execution capabilities that differentiate them from their competitors. Sustainability plays an integral role in investment decisions. We see it as a strong differentiator and an important value creation opportunity for firms.

Our Edge

Investing like a business owner

Over more than two decades the team nurtured an integrated investment approach that relies on investing in companies with outstanding business characteristics. It judges each investment opportunity from three mutually beneficial perspectives: i) management quality and competitive position, ii) sustainability iii) as well as capital returns and growth. The team’s analytical rigour enables the portfolio manager to run a focussed portfolio with a low turnover.

Deep knowledge of sustainable investing

Over time team members have documented hundreds of company interviews and visits dedicated to sustainability and built a unique know-how about Swiss companies and sustainable investing. They are committed to foster and support sustainable corporate management, by engagement and diligent execution of voting rights.

Award-winning

The fund has twice won the ‘Best Swiss Equities’ award at the Swiss Sustainable Funds Awards (2020 and 2022). In their comments the jury honored the sustainability characteristics of the portfolio as well as the strong performance track record.

Investment Team

GAM Swiss Sustainable Companies is led by Thomas Funk, who has managed the strategy since 2005. He works with Daniel Häuselmann, Head of Swiss Equities, and Dr. Karl Herzog who is responsible for sustainable development research. Each team member has over 20 years experience in the Swiss stock market and over 15 years’ tenure with GAM.

The team’s location in Zurich enables them to conduct their own in-depth research onsite and generate their own insights, independent of external research providers.

The team is responsible for research, portfolio management, trading and risk management. However, an independent risk oversight function is performed additionally by GAM’s risk teams.

Sustainability is key to the long-term competitiveness of companies. When we invest in the right companies, time is on our side.

Thomas Funk

Investment Director

Daniel Haeuselmann

Head of Swiss Equities

Karl Herzog

Sustainable Systems Expert

Philosophy and Process

Trends in the economy, valuations, interest rates and investment opportunities are changing over time. Therefore, the investment team follows a series of indicators to fit the portfolio to the prevailing investment environment. This can lead to changes in portfolio composition. Such shifts are gradual and most of the time slow. However, the dominating source of return is sought in companies that have the ability to find a sustainable way to boost economic profits.

Capital returns and reinvestments in the business drive economic profits over time. To understand the underlying factors the team conducts extensive research covering the quality of a firm’s management, its market position in the value chain and its ability to compete. Sustainability is fully integrated in the analysis and reveals how well a company adapts to its ecological and social context, and whether it has the organizational prerequisites to be able to evolve in a competitive environment.

The team’s proprietary approach of sustainable development research has been created more than 20 years ago by Dr. Karl Herzog. It is based on general organizational patterns derived from living nature. We analyze around 90 companies across a 3-year cycle.

Investment environment

Analysis of valuations, indicators and the economic cycle
Define attractive segments based on the Swiss market characteristics eg growth firms, defensive or cyclical companies

Stock selection

Looking at each company from 3 mutually beneficial perspectives: Business model, sustainability, return on capital and growth
Understand the value drivers of each company and its potential to evolve

Portfolio construction

Select stocks for a long holding period, combination of different value drivers, fit the portfolio to the investment environment
Construct a diversified portfolio of 30 – 50 stocks that aims to outperform the benchmark on a 3-year time frame

Reasons to Invest

Corporate landscape

Switzerland and its stock market is characterised by a unique concentration of companies, which have evolved into strong international players. As the home market for Swiss companies is small, they are forced to go abroad at an early stage of corporate development giving them valuable experience for successful geographical expansion. High labour costs make it expensive to operate in Switzerland. However, this is more than compensated for by an outstanding level of education and a flexible labour market. The Swiss school and university system ensure that not only an elite can achieve a high level of education but ensures a high skill level through the population.

Crises create opportunities

Several economic crises and the strong Swiss Franc have led a number of Swiss companies to rethink their business by reducing costs, concentrating on the core and promote innovation to boost growth. This creates opportunities to invest in companies that shape or run a high value-added business and strive to expand further through secular growth trends, market share gains and/or geographical reach.

Sustainability

Especially younger generations are paying increasing attention how companies from which they buy or for which they work fit into their ecological and social context. Thus, a firm's competitive position benefits strongly if its management applies principles of sustainable design as they open new ways to structure companies, design business processes and create products.

Key Risks

Capital at risk

All financial investments involve an element of risk. Therefore, the value of the investment and the income from it will vary and the initial investment amount cannot be guaranteed.

Currency Risk [non base currency share class]

Non-base currency share classes may or may not be hedged to the base currency of the Fund. Changes in exchange rates will have an impact on the value of shares in the Fund which are not denominated in the base currency. Where hedging strategies are employed, they may not be fully effective.

Single Country Risk

Investment in companies of a single country may be subject to greater political, social, economic and tax risks and may be more volatile than investments in more broadly diversified funds. Local tax law may change retrospectively and without notice.

Equity

Investments in equities (directly or indirectly via derivatives) may be subject to significant fluctuations in value.

OuR Thinking

Active Thinking

8 min read

Active Thinking: Swiss precision, global vision

06 February 2025

Thomas Funk, Investment Director, Switzerland Equities, discusses how Swiss companies can achieve international growth and profit potential.

Outlook 2025

5 min read

Unleashing a new profit cycle

December 2024

SWISS EQUITIES: “A new profit cycle could go on for some time and drive growth in Swiss small and mid caps.”

Investment Opinions

17 min read

The Swiss franc – A blessing and a curse

07 February 2024

Thomas Funk, Investment Director, portfolio manager of Swiss Equities, analyses whether the structural growth of Swiss companies in the coming years will also be reflected in an increase in Swiss franc profits, despite the real appreciation of the franc.

Our Thinking

Fund Information

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Disclaimer: Past performance is not an indicator of future performance and current or future trends. The indications could be based on figures denominated in a currency that may be different from the currency of your residence country and therefore the return may increase or decrease as a result of currency fluctuations. Capital at risk: all financial investments involve an element of risk. Therefore, the value of the investment and the income from it will vary and the initial investment amount cannot be guaranteed. Any reference to a security is not a recommendation to buy or sell that security.