L'ETF iShares MSCI Switzerland Capped Index (EWL), coté au NYSE Arca, fait partie de ma stratégie d'investissement Ex-US International ETFs and Dividend Stocks. This seeks to achieve a solid and progressive dividend yield, while protecting itself against currency and market risk. The ETF aims to replicate, before fees, the price and yield of the Swiss MSCI 25/50 index, which is composed of shares of companies listed mainly on the Zurich Stock Exchange. It is designed to measure the performance of large and mid-cap companies on the Swiss market. With 38 constituents, the index covers approximately 85% of market capitalization. The fund permanently invests at least 80% of its assets in securities of this index.
The index is called capped, meaning that it limits the weight of a single security. It thus sets a maximum percentage on the relative weighting of a component which is determined by its market capitalization. This prevents a single position from exerting a disproportionate influence on the index.
For example, in Canada, the S&P/TSX Composite Index limits the weighting of any one component to a maximum of 10%, regardless of its market capitalization. This index was introduced in 2002, following the rise and fall of Nortel Networks, which at its peak represented nearly one-third of the total market capitalization of all stocks in the old TSX-300 Index.
The Swiss MSCI 25/50 index limits the weight of a single component to a maximum of 25%. D'autre part, la somme des composants qui représentent plus de 5% de l'indice ne doivent pas dépasser plus de 50% du total des actifs. Ceci est a priori une bonne chose étant donné la présence des poids lourds Nestle, Roche et Novartis à la bourse de Zurich. Néanmoins, à y regarder de plus près on se rend compte que les pondérations de l'indice suisse MSCI plafonné 25/50 sont très proches de celles de l'indice SPI, qui représente presque tous les titres négociés à la bourse suisse.
Top ten positions
| Company | EWL | SPI |
| NESTLE N | 17.79% | 17.95% |
| NOVARTIS N | 16.18% | 14.28% |
| ROCHE GS | 14.89% | 13.03% |
| UBS N | 5.53% | 5.02% |
| ABB LTD N | 4.40% | 4.44% |
| RICHEMONT N | 3.85% | 4.28% |
| CS GROUP N | 3.48% | 4.19% |
| ZURICH INSURANCE N | 3.31% | 4.05% |
| SYNGENTA N | 2.51% | 3.09% |
| SWISS RE N | 2.33% | 3.00% |
Sectoral distribution
EWL offre un rendement moyen modeste de 2.00%. Le dividende progresse par contre sur un rythme annuel moyen impressionnant de 20.76% (en USD). Ceci est dû certes à la vigueur des entreprises helvétiques, mais surtout à celle du franc suisse par rapport au dollar. La volatility en CHF, grâce à la diversification sectorielle et au caractère défensif des titres qui composent l'ETF, ne s'élève qu'à 15.43%, ce qui est très appréciable. Les frais liés à la gestion de l'ETF sont quant à eux minimes, avec 0.53%.
EWL is a perfect stock to diversify a heavily dollar-oriented portfolio., ce qui est souvent le cas lorsque l'on suit une stratégie de growing dividends. Grâce à sa composition strictement helvétique, l'ETF affiche un à $risk almost zero. This means that a variation in the greenback has no impact on the CHF value of the security.
EWL undoubtedly has some nice characteristics for a growing dividend payer. In addition to the income it provides, it allows you to cover yourself against monetary risk while diversifying your portfolio with a nice selection of top-tier stocks, at a lower cost (0.5% expense ratio). With a **** rating, it is ultimately a stock that offers a very good profitability/risk ratio. It is a stock that could become interesting in the event of a price drop, for example. So keep a close eye on it this year...
Sources: Yahoo Finance, Swissquote, MSCI, money.usnews.com, Investopedia
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