Since the United States is the world's largest national economy, it is understandable that North American investors think that it is fine to hold all of their investments within their own country's borders in US and Canadian dollars. Overweighting investments in their home country is understandable, but a home bias isn't optimal.

While the North American stock market has been incredibly strong, and by some definitions qualifies for having the longest bull market in history, it hasn’t always been that way and it's unlikely to maintain that streak forever. It’s impossible to predict what will happen with the stock market going forward, but, historically, US stocks have also seen long periods of underperformance compared to international stocks.

Owning a home-biased portfolio can lead to suboptimal risk-adjusted returns. According to best practices in portfolio management, the volatility of an investment portfolio is reduced by adding international diversification to the overall wealth strategy.

Considering that the world's equity assets make up over 50% of invested assets versus the US' 43%, it makes sense to include a good portion of diversified international assets in a portfolio to reduce the risk of overweighting one particular country.

What percentage of a North American investor's portfolio should be invested internationally? Some advisors will claim that 50% is fitting, while others suggest anywhere between 5 and 30%. Beginners may choose a smaller percentage, others more comfortable with going global up to 30% or more.

True international diversification means that a portfolio will never be the portfolio with the highest returns, but it will also generally be better equipped to handle local crises and downturns. Appropriately designed, an internationally-diversified portfolio not only helps to avoid the risk of local downturns but also to capitalize on global growth over the long term.

In the long term, a well-diversified, global portfolio can help avoid unnecessary risks.

Jurisdictional diversification is key

Holding some emerging market mutual funds at a local bank, even in other currencies, is not true international diversification. Going to another jurisdiction outside of the United States and Canada, to other non-domestic financial institutions, holding other foreign investments and other currencies is the real thing when it comes to effective risk diversification. Engaging a wealth manager with in-depth international experience and a global outlook with a different perspective than a local investment adviser leads to true international diversification.

Future financial well-being shouldn't be tied to just one country, one market, one currency, and one perspective.

North American financial professionals for the most part, understandably focus on their home markets, local financial institutions, and dollar investments. However, to achieve greater resiliency for an overall portfolio through international diversification, a global-oriented wealth manager will target different investments than a domestic advisor. Holding a portion of a portfolio in a bank outside of the North American banking system provides institutional risk diversification and greater flexibility. Currency diversification provides a hedge against a falling US dollar. The prudent investor shouldn't walk around blindfolded but should prepare for bumps that may arise along their home-market roads.

It is simply prudent to have some assets outside of the North American system.

Where to go? Grüezi! Welcome to Switzerland.

With the turbulences of the past left behind, Switzerland remains the global leader for crossborder private wealth management with a world share of over 25%, of which about half is from investors abroad.

Switzerland remains the global leader for crossborder wealth management.

The highest level of economic and political stability, neutrality, high-quality services and extensive expertise and experience is Switzerland's claim to fame for its long-term success as a leading, innovative financial center. Especially during times of crisis and increasing volatility, the world's wealthy turn to Switzerland as a safe haven for their assets. Recently, Switzerland has been named the world's most resilient country best able to handle the pandemic crisis and its aftermath.

The Swiss traditions of reliability, continuity, and excellence with a high regard for privacy and discretion in an increasingly transparent world are qualities appreciated by astute international investors concerned about the preservation of their assets.

Switzerland: Perhaps the safest place for assets in an increasingly unsafe world.

Getting started and getting it right

Swiss wealth managers registered as an Investment Adviser with the Securities and Exchange Commission in the United States focus on providing US tax-compliant, wealth management services to US persons domiciled in the United States and abroad. Some provide their services to Canadian investors as well.

Providing services, giving advice, telephone calls, correspondence and personal meetings with clients, or promotional activities for potential clients and strategic agreements with US business partners are allowed without restrictions. US and Canadian reporting requirements are also clear and the necessary, accurate documents are provided in a timely manner to fulfill reporting requirements and tax obligations.

American and Canadian clients are welcome in Switzerland

A relationship can easily be established with a Swiss SEC-registered wealth manager and an internationally-diversified portfolio held with a Swiss bank that welcomes North American clients can be set up without leaving home. The Swiss wealth manager of choice handles every step of the way.

Swiss SEC-registered wealth managers range from larger, bank-associated firms to the US-focused entities of Swiss private banks as well as smaller and more personal independent wealth management boutiques. Minimum amounts of investment start at USD 100,000, USD 250,000, USD 500,000 or 1 mn or more depending on the individual wealth manager. Many travel to the US and Canada regularly to meet with clients and advisers. However, Swiss wealth managers are up-to-date with online meetings and conferences and Switzerland is never more than a phone call or a click away.

Swiss SEC-registered investment advisors are also happy to collaborate with North American financial professionals and other advisors in co-counseling their clients to develop an internationally-diversified portfolio to complement a home-based portfolio already in place.

There's an easy way to find a suitable Swiss wealth manager.

Which Swiss SEC-registered investment advisor to choose?

Finding a suitable Swiss SEC-registered or Canada-licensed wealth manager is easy. The Swiss platform, AW+SWITZERLAND lists them all, in an easy-to-access manner.

Getting the touch and feel of a wealth manager of choice before an initial contact by comfortably and efficiently browsing through their listings with access to their websites, SEC registrations, ADV Part 2 Brochures and Part 3 Brochures with information on company size, assets under management, minimum amounts of investment, strategies, fees etc. makes doing the homework and narrowing down the wealth manager of choice easy. An initial email or conversation will start the process.

AW✚SWITZERLAND is happy to make personal e-introductions to any of the Swiss wealth managers to make getting started even easier.

Publications are for your information only and are not intended as an offer, promotion, or solicitation to buy or sell any financial instrument or perform any other financial transactions. All information and opinions expressed in the publications reflect current views as of the date of publication and may be liable to change without notice.