Diversify to reduce volatility

Our portfolio focuses on relatively low-volatility stocks, which allows us to focus more on dividend yield than on stock price fluctuations. As already mentioned, stock market appreciation is considered a happy consequence of a good dividend policy pursued by the company in which we have invested. In order to maintain low volatility at portfolio level, we also avoid sector overweightings.

However, focusing on US dollar-denominated securities carries the risk of greater volatility. To do this, we have chosen to limit ourselves to companies of international scope, active in the US of course, but also in Europe, Japan, emerging countries, and even almost everywhere for some of them (such as MCD or PEP). These companies can therefore benefit from a fall in the greenback to stimulate their exports.

To further ensure the success, and also diversify the type of investments made, we suggest subscribing to mixed investment funds (shares and bonds) and real estate denominated in CHF and EUR. Based on experience, the share of shares in mixed funds should fluctuate between 30 and 50%.

You can find some interesting funds of this type on morningstar by doing some research. Here are my favorites:

• Carmignac Heritage A, mixed fund in EUR, ISIN FR0010135103. The management aims to outperform its reference indicator composed of 50% of the Morgan Stanley global index of international stocks MSCI AC World Index, converted into euros + 50% of the Citigroup WGBI All Maturities Eur global bond index and is oriented towards the search for absolute and regular performance, compatible with the imperative of security required for the constitution of a medium-term heritage given its risk profile, namely an investment of at least 50% in bonds, treasury bills, debt securities negotiable on European and international markets, the balance being distributed in European and international stocks.
• Schroder Capital Fund, mixed fund in CHF, ISIN CH0009015188.
• CS REF INTERSWISS (INT), real estate fund in CHF, value 276935.

Let us clarify that these funds are not part of our portfolio and that it is just a way of diversifying the risk linked to stocks and the dollar.