Attractive yield opportunities with cash alternatives

Viewpoint

People in Switzerland hold almost one third of their assets as cash in accounts. Yet more and more banks are reporting negative interest rates. As a result, 30 percent of these assets will gradually shrink. Are there still any financial investments that avoid loss of asset value? Here we show a few suitable alternatives to cash accounts.

Swiss interest rates have moved in only one direction over the past decade: downwards. There seems to be no end in sight for this period of low interest rates. Investors who keep their cash in bank accounts must be prepared for dwindling assets. Or maybe not.

 

Would you like to find out more about cash alternatives? Download the booklet now

 

Bond funds and structured products enable investors to participate in a range of markets and to hedge against certain risks. Their form depends on the particular investor’s risk tolerance and the level of potential yield.

In the section below, we present three investment ideas as alternatives to cash accounts:

Bond funds with short durations

Bonds with a short term to maturity may ensure that assets grow steadily. Nevertheless, investors have to take on greater risk than with cash accounts. Our investment-grade bonds are mainly held by institutional investors; as a result, they tend to have higher liquidity and lower volatility than lower-rated bonds.

 

 

Vontobel Fund - Euro Short Term Bond

 

 
  • Short-term bond fund
  • Invests globally in bonds with various durations issued by good quality borrowers
  • Has provided constant returns since its launch
  • Risk diversification
  • Limited participation in the potential of individual securities

 

More information

 

Customized structured products

Structured products can offer an attractive investment opportunity to investors who prefer to exercise caution. These specifically include the conservatively structured barrier reverse convertibles (BRCs).

 

Barrier reverse convertibles

 

  • Safety buffer ensures risk reduction
  • Guaranteed coupon – regardless of underlying asset performance
  • Potential yield is usually higher than customary bank interest rates
  • If barrier is breached: participation in the performance of the underlying
  • Investor bears issuer risk

 

More information

 

If you are looking for a customized solution, you can create structured products on deritrade. You have a choice of issuers. The product can be structured to meet individual needs.

 

Your contact

 

Michael Haupt

Director

Structured Solutions & Investments Specialist

+41 58 283 74 94

[email protected]