Index guideSwitzerland

The Swiss Market Index

Twenty companies, of which three have historically carried close to half the index — which is why Switzerland imposed a cap that most benchmarks still do without.

1988Launched

20Constituents

18%Weight cap

Float-adj. capWeighting

The SMI launched in June 1988 with a base value of 1,500, covering the twenty largest and most liquid companies on the Swiss exchange. It is the smallest constituent count of any index in this cluster, and the most concentrated.

Three companies, half an index

Swiss listed equity is dominated by a food and beverage group and two pharmaceutical companies of global scale. Between them they have historically accounted for something approaching half the index — a level of concentration that developed-market benchmarks rarely reach.

Concentration and the capWhy the ceiling was introduced

The 18% ceiling was adopted in 2017, largely so that funds tracking the index could meet regulatory diversification limits applying to collective investment schemes.

The reason for the cap is worth understanding, because it is different from the reasoning behind the EURO STOXX 50's ceiling. European fund regulation limits how much of a fund's assets may sit in a single issuer. An uncapped SMI would have breached those limits, making a straightforward tracking fund impossible to run. The index changed to accommodate the products built on it.

That is a general point about modern index design: benchmarks are no longer only measurements. They are the specification for financial products, and product requirements feed back into methodology.

Defensive by composition

Pharmaceuticals and consumer staples are classically defensive sectors, and their dominance gives the SMI a distinctive profile: it typically falls less in downturns and rises less in strong markets than more cyclical benchmarks.

Combined with the Swiss franc's status as a currency investors buy in periods of stress, the index has an unusual character for holders outside Switzerland — currency and equity effects that can offset or compound depending on the episode.

Switzerland sits outside the eurozone and therefore outside the EURO STOXX 50 entirely, despite being at the geographic center of Europe. Broader measures such as the STOXX Europe 600 include it. It is a clean illustration of how index boundaries follow currency and regulatory lines rather than maps.

Facts worth knowing

Base value 1,500, June 1988An unusual starting figure — most indexes begin at 100 or 1,000.
Twenty constituents is the smallest hereEven the Dow, at 30, is larger.
The cap exists for fund regulationNot primarily as an investment judgment about concentration risk.
Coverage is high despite the small countTwenty companies capture the large majority of Swiss listed market value, because that value is so concentrated.
The SMI Expanded covers moreA broader Swiss index exists for mandates needing beyond the top twenty.

Common questions

Why cap constituents at 18%?

To allow funds tracking the index to comply with regulatory diversification limits on single-issuer exposure. Without it, a compliant tracking fund would be difficult to construct.

Is the SMI a defensive index?

By composition, yes — pharmaceuticals and consumer staples dominate. It has typically been less volatile than more cyclical European benchmarks.

Why isn't Switzerland in the EURO STOXX 50?

That index covers eurozone countries only. Switzerland retains the franc and is therefore excluded, though it appears in broader pan-European measures.

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