Inflation figures in the USA and the eurozone are currently as high as in the 1970s. In Switzerland, the inflation rate of 2.4% is higher than it has been for 13 years. This relatively moderate rate of domestic inflation by international standards can be explained by the strong Swiss franc, the high proportion of administered prices in Switzerland and the lower dependency on oil and gas imports.
In this blog, we analyse how a Swiss portfolio behaved during periods of high inflation and examine the current environment. To this end, we have formed
- a portfolio of 60% Swiss equities and 40% Swiss bonds (a typical weighting in the USA) and
- a multi-asset portfolio with real assets such as real estate, gold and commodities (each with a 5% weighting) but with fewer equities (55%) and bonds (30%), in each case with unusually long historical time series.