Lapis Asset Management now has a long experience of investing in the financial markets. What exactly do you do?
«We are an asset management company based in Lugano. We distinguish ourselves from other structures for a specialized and structured offer in the equity department for our private and institutional clients. Lapis AM has created and calculated 23 stock indices (16 Lapis Dividend Yield Indices and 7 Lapis Next Generation Indices) which can be viewed in detail on the website www.lapis.finance.
All indices adopt the same four rules:
- Rule based, i.e. well-defined rules
- Quality of the titles
- Equally weighted securities
- Quarterly rebalancing.
These indices form the basis for the equity share of our wealth management. If we consider that the current level of interest rates in the world is not very profitable, an investor is “almost forced” to invest a part of his assets in shares to preserve their purchasing power ».
How are these indices used?
"Lapis uses indices for the direct management of private customers, directly with individual securities for customers with assets exceeding 500 francs, and with investment funds or AMC certificates for lower capital, allowing everyone to benefit from of this opportunity ".
What are the advantages of the management carried out through these tools?
«Our indices give the client the certainty that investing in one or more of our strategies allows them to always have a wide diversification and to follow a disciplined program that greatly increases the probability of obtaining an excellent result. The customer knows at all times how his savings are invested and knows that very precise rules are applied to the rebalancing process, which are not subject to any conflict, neither emotional nor of interest ».
How do you choose the companies and sectors to include in these indicators?
"Before calculating an index, a precise investment universe is always defined that takes into account the strategic sector of the index, the minimum market capitalization of each company (for example 5 billion dollars), and the regular payment flow of the dividends over the years, which can be 5, 10 or 25 years retroactively.
Based on this 'Universe List' the 'Lapis List' of the Index is chosen based on the following criteria for each stock:
- 50% Dividend Yield
- 25% Market Cap
- 25% Dividend growth over the last 5/10/25 years.
The first 25 or respectively 50 companies of the 'Universe List', depending on the rules of the index, will be selected and will be the integral part of the Lapis index or of the product that will be created. This process is repeated every quarter (rebalancing) and each company will have the same weight (equal weight) ».
Why are dividends so important in choosing companies?
"The companies we choose that pay a dividend regularly usually create products desired by the market (see the cases of Apple, Microsoft, and so on), and during" normal "years they generate a profit, part of which they pay to the investor . On the other hand, there are enormously successful companies like Amazon or Facebook that have never paid a dividend and have generated very important performances for investors, but it is easy to forget that there are thousands of companies that will never become like these two. and the investor could therefore face large losses. The segment of companies we have chosen concerns companies with stable growth which in turn is VERY paying in the long term (see Nestle, LVMH, Roche, Coca Cola, and others) ».
Dividends are certainly good indicators for the past performance of companies, but are they also good for the future?
"Of course. The economic model of these companies as a rule never changes much, so it remains a good indicator for the future. There are companies that reinvest their Free Cash Flow into new products with great success. We have seen that a company that pays dividends on a regular basis usually follows a sustainable business model that is not too cyclical and less risky. Management is usually more disciplined with expansion strategies ».
Could you give us some examples of companies that you include in the indices, and what dividends do they pay?
«It depends from index to index, usually our selection criteria imply that the company has paid the dividend for a certain number of years, without reductions or interruptions. Furthermore, the company's stock market capitalization can vary from a minimum of 2 to 25 billion dollars ».
Do your indices include Swiss companies?
“In Switzerland we have 3 successful companies of international standing: they are Roche, Novartis and Nestlé, which have been paying dividends for over 25 years without interruption and always on the rise. Then we have in the Lapis Medical Devices index companies such as Lonza and Straumann, which have been paying regular and steadily increasing dividends for over 5 years. Overall, we take into consideration approximately 800 companies for the management of all our indices ».
You have also created an index concerning family-owned businesses. Why are these companies more attractive?
«We have created an index and respectively a fund that collects only companies with at least 20% control or ownership by family groups, with a minimum capitalization of 5 billion and a regular dividend payment for at least 10 years. This investment strategy has delivered outstanding results !!! The idea of companies to invest in the long term and with greater prudence has paid off and still is ».
Could you give us some examples of indexes you have created?
"To date, we have created 23 Lapis Indices ranging from different sectors and investment thoughts, from indices for those looking for a dividend yield (Lapis Global Top 50, Lapis Global Family Owned), to highly topical thematic indices ( Sustainable, Medical Devices, Water, Crypto). A deepening and the detail is visible on our internet page. We have noticed that our indices have managed to beat almost all of the reference 'benchmark', which is remarkable. This factor is above all due to our calculation system which only takes into account quality companies, diversification and the discipline of a rebalancing on a regular basis ».
Does risk management improve with your strategy?
«Investing in quality companies for the long term is perhaps the least risky investment there is! Financial forecasts usually do not represent an added value for the investor, because they often lead to making investment decisions with inappropriate timing and on securities that are not very reliable or are priced too expensive ».
What are the differences compared to conventional investment funds?
«Discipline, simplicity and clarity !!! Our indices, respectively our products, allow the investor to know what he has in his portfolio at all times. We also offer our customers a competitive pricing that does not affect performance ».
What is your target clientele and what are the advantages of turning to you compared to normal investment funds?
"Our way of operating now allows all types of investor to approach our products, from the retail client, who will find in us a reliable partner and an offer of banking structures with attractive rates, to the institutional client, be it a trust structure or a bank, since we offer them the opportunity to create a financial product to be offered to customers in collaboration with us ».
Have you also transferred the right to use these indices to other companies?
«This is becoming a very important business for us. We have had the opportunity to create, in collaboration with other structures, products in various squares, such as Zurich and London. This type of business allows commercial partners to find the right idea for them without having to invest financially on management, since our advisory support provides them with all the necessary services ».
LAPIS Asset Management Ltd
Via Collina 9
6962 Lugano-Viganello
Phone: +41.91.971.1693
www.lapis-am.com
