The Swiss Franc (CHF) Carry Trade with Margin Lending

Carry trade strategies allow investors to enhance portfolio returns by borrowing in a low‑interest‑rate currency and deploying the funds into higher‑yielding assets. The return is generated from the interest rate differential between the funding currency and the investment asset. 

We are pleased to introduce Swiss Franc (CHF) financing at an attractive rate of 1%* (as of 18^th March 2026) when you take a margin loan using our Margin Lending feature.

Why CHF?

The Swiss Franc (CHF) is widely viewed as a preferred funding currency and traditional safe‑haven, supported by Switzerland’s macroeconomic stability, low inflation, and consistently accommodative monetary policy. 

1. A Stable Economy with Persistently Low Inflation

Switzerland ‘s low inflation is driven by several structural characteristics:

• A strong currency that keeps import prices contained,
• Prudent fiscal policy with low public debt that allows the SNB to maintain accommodative settings without inflation risk
• A stable political and economic environment that reinforces confidence in the CHF as a safe‑haven currency.

Switzerland’s low inflation has enabled the SNB to maintain an accommodative monetary policy. The central bank signals that they plan to hold rates at 0% through 2026 with the possibility of returning to negative rates though the bar remains high. 

This policy backdrop results in:

• Structurally low borrowing costs
• Sustainable carry trades, as low rates enhance the net yield spread for investors.
• Reduced interest‑rate volatility, providing clarity for medium to long‑term carry strategies.

Supercharge your DBS dividend yield from 5.5% to 10% using a CHF loan

Margin lending/financing can help boost your buying power by up to 4x, and in turn help supercharge your dividend yield.

1. Pick a stock yielding a good dividend. In Singapore, there are many local companies that provide a dividend yield above 4%. Some names include DBS, SIA, Sembcorp Industries, Mapletree Industrial Trust and Lendlease Reit. You can also buy US stocks though they tend to focus more on share buybacks and reinvestment into their business than paying a good dividend.

2. Purchase the stock using a margin loan in your CHF sub-account. Once margin lending is enabled, the system will automatically utilize a loan whenever there is insufficient cash to settle the trade. The projected loan utilisation will be shown on the trade ticket before you submit the order, allowing you to review the margin impact in advance.

Let us look at an example below:

Let's assume that you wish to boost your buying power by a conservative 2x to buy 10,000 CHF worth of DBS shares with a dividend yield of 5.5%. By taking a loan in CHF to buy DBS shares, you can boost your dividend yield from 5.5% to 10.0%. Loan is taken at the Swiss offer rate of 0%, marked up by 1% (VIP margin rate).

Cash = 5,000 CHF
Margin loan = 5,000 CHF

Dividends = 5.5% x 10,000 CHF = 550 CHF
Interest paid = 1%* x 5,000 CHF = 50 CHF
Net Dividend = 550 CHF – 50 CHF = 500 CHF
Yield = 500 CHF / 5000 CHF = 10.0%

A margin loan in USD can be taken at the SOFR rate of 3.75%** where the interest charge on the loan (after accounting for the mark up of 1%) would be 4.75%. If you consider your total interest costs, a 100,000 USD loan will incur 4,750 USD/year in interests while the same loan in CHF (79,500 CHF) will incur only 1000 USD/year.

Using the same example above, a loan in USD will consequently lead to a lower DBS dividend yield of 6.25% (vs 10.0% using a CHF loan), as interest cost would be higher at 4.75% x 5,000 = 237.50.

Key Risks to Consider

1. Foreign Exchange (FX) Risk
FX risk arises when you take a CHF margin loan to invest in assets priced in another currency like US or Singapore equities and ETFs. In doing so, you are effectively short CHF—your returns benefit if the franc depreciates against the investment currency, but face downside if the franc appreciates.

One way to mitigate this currency risk is to hedge your CHF exposure using our FX trade ticket on the platform. E.g. If you took a margin loan of 10,000 CHF to purchase US stocks in USD, you could hedge the FX risk by going long 10,000 CHFUSD.

2. Interest Rate Risk
Interest‑rate expectations directly affect borrowing costs, making policy outlooks important for managing leverage. The Swiss National Bank (SNB) is widely expected to keep its policy rate at 0% through 2026, with inflation projected to remain within its stability range at 0.3% in 2026 and 0.6% in 2027, reducing the likelihood of tightening.

The SNB has also indicated a preference for FX intervention over rate changes when addressing franc strength. The CHF’s resilience continues to limit imported inflation, keeping the pass‑through from global energy shocks modest and helping maintain accommodative conditions.

3. Market Risk
Margin Lending allows you to increase your market exposure by boosting your purchasing power and taking larger positions than your own capital alone would permit. While this can amplify potential returns, it also increases sensitivity to market movements.

If your investment value falls, you may need to top up funds or eligible collateral to maintain required margin levels. Failure to do so will trigger an automatic partial stop‑out, reducing margin loan utilisation from 100% to 90% to help protect your overall positions.

* Swiss offer rate used is 0% as of 18 March 2026. Saxo mark up above the offer rate is 1% (VIP rate)

**US SOFR offer rate used is 3.75% as of 18 March 2026. Saxo mark up above the offer rate is 1% (VIP rate).