Key Takeaways
- Swiss and Nordic countries carry significantly lower sovereign debt levels than the United States, with Switzerland’s debt-to-GDP ratio around 37% and Sweden’s around 33% compared to the U.S. approaching 125%.
- The Swiss franc has historically served as a safe-haven currency, appreciating against the U.S. dollar during periods of economic uncertainty and gaining over 13% against the dollar in 2025 alone.
- Three single-country ETFs — FLSW, EWL, and EWD — offer dividend investors access to Swiss and Swedish equities with varying expense ratios, yields, and liquidity profiles.
- Switzerland’s equity market is heavily concentrated in defensive sectors like healthcare and consumer staples, anchored by global giants such as Nestlé, Novartis, and Roche.
- Sweden’s market tilts toward industrials and financials, providing exposure to companies like Atlas Copco, Volvo, and Spotify that benefit from global infrastructure and technology trends.
- Norway’s $2.2 trillion sovereign wealth fund — the world’s largest — illustrates the fiscal strength of Nordic economies and their fundamentally different approach to national wealth management compared to the United States.
Table of Contents
- Why Income Investors Are Looking Beyond the U.S. Dollar
- Switzerland: Fiscal Discipline and Safe-Haven Currency
- Nordic Countries: Low Debt and Strong Sovereign Finances
- Swiss Dividend ETFs: FLSW vs. EWL
- Swedish Dividend ETF: EWD
- Side-by-Side ETF Comparison
- How Currency Diversification Works for Dividend Investors
- Tax Considerations for International Dividend ETFs
- Risks to Consider
- Frequently Asked Questions
Why Income Investors Are Looking Beyond the U.S. Dollar
For many dividend investors, building a portfolio of reliable U.S. income-paying stocks has long been the default strategy. Companies like Johnson & Johnson, Procter & Gamble, and Coca-Cola have rewarded shareholders with decades of consistent dividend growth — and for good reason, they remain popular holdings.
However, several macroeconomic trends have prompted some investors to reconsider whether holding 100% of their dividend portfolio in U.S.-dollar-denominated assets is the most prudent long-term approach. The U.S. national debt has been growing at a pace of roughly $2.4 trillion per year according to updated Congressional Budget Office estimates, and the dollar’s share of global foreign exchange reserves has declined to its lowest level in approximately 25 years according to data from the Federal Reserve.
None of this means the U.S. dollar is about to collapse. The dollar remains the world’s primary reserve currency, and U.S. markets continue to offer some of the deepest liquidity on the planet. But for income-focused investors who think in terms of decades rather than quarters, allocating a portion of their dividend portfolio to currencies and economies with fundamentally different fiscal profiles has historically provided a diversification benefit.
Two regions that stand out for dividend investors considering international exposure are Switzerland and the Nordic countries — particularly Sweden and Norway. Both regions feature economies characterized by low sovereign debt, strong corporate governance traditions, and companies with long histories of returning cash to shareholders.
Switzerland: Fiscal Discipline and Safe-Haven Currency
Switzerland occupies a unique position in the global financial landscape. The country’s government debt-to-GDP ratio has been on a consistent downward trend, sitting at approximately 15.7% at the federal level and roughly 37% when including all levels of government. For context, the United States’ debt-to-GDP ratio exceeds 120%.
This fiscal discipline isn’t accidental. In 2003, Switzerland introduced a constitutional “debt brake” mechanism that requires the federal government to balance its budget over the course of economic cycles. During boom years, surpluses must be used to reduce debt, and during downturns, limited overspending is permitted — but extraordinary expenses must be repaid within a defined timeframe. This structural approach to fiscal management has kept Swiss public finances among the strongest in the developed world.
The Swiss franc (CHF) has historically been regarded as a safe-haven currency — a status it has held since roughly World War I. During periods of geopolitical uncertainty and financial market stress, investors have tended to move capital into Swiss-franc-denominated assets. As recently as 2025, the franc appreciated over 13% against the U.S. dollar, with one financial strategist telling CNBC that the franc had established itself as the leading safe-haven currency.
For dividend investors, this matters because when you hold Swiss equities through an ETF, your returns are influenced by the underlying performance of the stocks and the movement of the Swiss franc relative to the dollar. Historically, during periods when the U.S. dollar has weakened, Swiss-franc-denominated assets have tended to appreciate in dollar terms — providing a natural counterbalance.
Switzerland’s Corporate Landscape
Switzerland’s stock market is dominated by a handful of globally recognized companies spanning healthcare, consumer staples, financial services, and industrials. The three largest publicly traded Swiss companies — Nestlé, Novartis, and Roche — together represent a significant portion of the country’s equity market capitalization.
These are not small regional businesses. Nestlé is the world’s largest food and beverage company by revenue. Novartis is a top-tier global pharmaceutical company that recently spun off its generics business Sandoz to focus on innovative medicines. Roche is a leader in both pharmaceuticals and diagnostics. All three have long histories of paying and growing dividends.
Beyond these three, Switzerland is home to UBS Group (global banking and wealth management), Zurich Insurance Group (a major global insurer yielding above 5%), Swiss Re (one of the world’s largest reinsurance companies), ABB (industrial automation), and Richemont (luxury goods). This mix of defensive and cyclical names gives investors exposure to diverse revenue streams denominated in Swiss francs.
Nordic Countries: Low Debt and Strong Sovereign Finances
The Nordic countries — Sweden, Norway, Denmark, and Finland — share several characteristics that make them appealing from a fiscal stability perspective. As a group, they tend to carry lower sovereign debt levels, maintain robust social safety nets funded by sustainable tax policies, and operate with a degree of fiscal transparency that is uncommon globally.
Sweden’s Fiscal Profile
Sweden’s government debt-to-GDP ratio stood at approximately 33% as of mid-2025, having declined steadily from a peak of around 67% in the mid-1990s. An IMF report on Sweden published in early 2025 confirmed that the country’s risk of sovereign stress is low and that public debt is sustainable, with substantial fiscal space remaining. The country maintains a debt anchor policy targeting gross public debt below 35% of GDP.
Sweden’s corporate landscape is notably different from Switzerland’s. Where Switzerland leans heavily toward healthcare and consumer staples, Sweden has a deep bench of world-class industrial companies. Names like Atlas Copco (industrial compressors and vacuum technology), Volvo (trucks and heavy equipment, not the car brand), Sandvik (mining and construction equipment), and ASSA ABLOY (the world’s largest lock manufacturer) have made Sweden’s industrial sector globally competitive.
Norway’s Unique Position
Norway deserves special mention even though no single-country Norwegian ETF is discussed in this article. The country is home to the world’s largest sovereign wealth fund, which held approximately $2.2 trillion in assets at the end of 2025. That translates to roughly $400,000 per Norwegian citizen.
The fund was established in the 1990s to invest surplus revenues from Norway’s oil and gas industry, and today more than half of its value comes from investment returns rather than petroleum inflows. The fund earned $247 billion in profit during 2025 alone and finances roughly 25% of Norway’s national budget. This represents the polar opposite of the fiscal trajectory in many developed economies — instead of borrowing against the future, Norway has been systematically investing for it.
For dividend investors, the Nordic region offers exposure to economies with fundamentally different balance sheets than the United States, currencies (SEK, NOK, DKK) that provide diversification away from the dollar, and companies with strong dividend cultures rooted in conservative financial management.
Swiss Dividend ETFs: FLSW vs. EWL
For U.S.-based investors seeking exposure to Swiss equities, two primary ETF options exist: the Franklin FTSE Switzerland ETF (FLSW) and the iShares MSCI Switzerland ETF (EWL).
Franklin FTSE Switzerland ETF (FLSW)
FLSW tracks the FTSE Switzerland RIC Capped Index, which measures the performance of Swiss large- and mid-capitalization stocks. The fund was launched by Franklin Templeton in February 2018 as part of a series of single-country ETFs designed to undercut competitors on fees.
Key characteristics of FLSW include an expense ratio of just 0.09% — making it one of the cheapest single-country ETFs available — approximately 58 holdings, and a dividend yield that has recently been around 2%. The fund’s top holdings include Roche (approximately 12.5%), Novartis (approximately 11.5%), and Nestlé (approximately 10.9%), with additional significant positions in UBS Group, ABB, Richemont, and Zurich Insurance Group.
The primary drawback of FLSW is its relatively small asset base (around $60-70 million) and lower trading volume, which can result in wider bid-ask spreads compared to its larger competitor.
iShares MSCI Switzerland ETF (EWL)
EWL is the legacy Swiss equity ETF, having launched all the way back in March 1996. It tracks the MSCI Switzerland 25/50 Index and is managed by BlackRock’s iShares.
EWL holds approximately 46 stocks and carries a higher expense ratio of 0.50%. However, it makes up for the cost differential with substantially more assets under management — roughly $1.47 billion — and meaningfully higher daily trading volume. This liquidity advantage means tighter bid-ask spreads and easier execution for investors moving larger amounts of capital.
The top holdings in EWL mirror FLSW closely: Roche (approximately 13.9%), Novartis (approximately 12.6%), and Nestlé (approximately 12.3%). The sector breakdown is similarly dominated by healthcare (roughly 35-40%), financial services (approximately 20%), and consumer defensive stocks (approximately 13-14%).
Choosing Between FLSW and EWL
The choice between these two funds comes down to a tradeoff between cost and liquidity. FLSW charges roughly one-fifth of what EWL charges in annual fees, which compounds meaningfully over long holding periods. On a $10,000 investment held for 20 years, the difference between a 0.09% and 0.50% expense ratio amounts to hundreds of dollars in savings — money that stays in your pocket compounding.
However, EWL’s significantly larger asset base and higher trading volume mean you’re less likely to encounter liquidity issues when buying or selling. For investors making regular, smaller purchases as part of a long-term accumulation strategy, FLSW’s cost advantage may be more compelling. For investors who might need to move in and out of positions with larger dollar amounts, EWL’s liquidity profile could justify the higher expense ratio.
Swedish Dividend ETF: EWD
The iShares MSCI Sweden ETF (EWD) provides exposure to Swedish large- and mid-cap equities by tracking the MSCI Sweden 25/50 Index. Like EWL, it’s managed by BlackRock’s iShares and has been around since March 1996.
EWD holds approximately 55 stocks and carries an expense ratio of 0.54%. The fund’s assets under management sit around $300-360 million, placing it in between FLSW and EWL in terms of size and liquidity.
What makes EWD particularly interesting from a sector perspective is how different it looks compared to the Swiss funds. While FLSW and EWL are healthcare-heavy, EWD’s portfolio is tilted toward industrials and technology. The fund’s top holdings include Spotify Technology (approximately 11.7%), Investor AB (approximately 8.1%, a Swedish investment holding company), Volvo (approximately 6.5%), Atlas Copco (approximately 6.1%), and ASSA ABLOY (approximately 4.9%).
This industrial and technology tilt means EWD provides a fundamentally different kind of exposure than Swiss ETFs. Swedish industrials like Atlas Copco, Volvo, and Sandvik are tied to global capital expenditure cycles — when companies worldwide invest in manufacturing capacity, infrastructure, and mining operations, these Swedish firms tend to benefit. If trends like reshoring of manufacturing and AI-driven data center buildouts continue to drive capital spending, these companies could be well-positioned.
EWD’s dividend yield has historically been in the range of approximately 2-3%, though it can fluctuate based on the timing of Swedish companies’ annual dividend payments, which tend to cluster in the spring months. The fund pays dividends semi-annually.
Side-by-Side ETF Comparison
| Metric | FLSW | EWL | EWD |
|---|---|---|---|
| Full Name | Franklin FTSE Switzerland ETF | iShares MSCI Switzerland ETF | iShares MSCI Sweden ETF |
| Issuer | Franklin Templeton | BlackRock (iShares) | BlackRock (iShares) |
| Expense Ratio | 0.09% | 0.50% | 0.54% |
| Approx. AUM | ~$68M | ~$1.47B | ~$345M |
| Number of Holdings | ~58 | ~46 | ~55 |
| Dividend Yield (TTM) | ~2.0% | ~1.6-1.8% | ~2.2-3.0% |
| P/E Ratio | ~18.5 | ~18.6 | ~16-20 |
| Dividend Frequency | Semi-Annual | Annual | Semi-Annual |
| Inception Date | Feb 2018 | Mar 1996 | Mar 1996 |
| Currency Exposure | Swiss Franc (CHF) | Swiss Franc (CHF) | Swedish Krona (SEK) |
| Top Sector | Healthcare (~35%) | Healthcare (~35-40%) | Industrials/Financials |
| Top 3 Holdings | Roche, Novartis, Nestlé | Roche, Novartis, Nestlé | Spotify, Investor AB, Volvo |
Data as of late 2025/early 2026. Yields, P/E ratios, and AUM fluctuate. Check the fund provider’s website for the most current figures before making any investment decisions.
Try our dividend growth rate calculator to see which fund might be a good fit for your goals.
How Currency Diversification Works for Dividend Investors
When you purchase shares of an ETF like FLSW, EWL, or EWD, you’re buying a fund priced in U.S. dollars on a U.S. exchange. However, the underlying companies in these funds earn their revenues and pay their dividends in Swiss francs (for the Swiss funds) or Swedish kronor (for EWD). This means your total return has two components: the performance of the underlying stocks and the movement of the foreign currency relative to the U.S. dollar.
Here’s a simplified example of how this works. Imagine you invest $10,000 in a Swiss ETF. The underlying Swiss stocks go up 5% in local Swiss franc terms over a year, and during that same year, the Swiss franc strengthens 3% against the U.S. dollar. Your total return in dollar terms would be approximately 8% — the stock return plus the currency tailwind. Conversely, if the franc weakened 3% against the dollar while the stocks gained 5%, your dollar return would be closer to 2%.
This is why currency diversification cuts both ways — it can amplify returns when the dollar weakens and dampen them when the dollar strengthens. Over long periods, however, holding assets in currencies backed by fiscally disciplined governments has historically been viewed as a hedge against purchasing power erosion in any single currency.
As dividend investor and author Daniel Peris has emphasized in his work on the Strategic Dividend Investor, the foundation of successful income investing lies in owning quality businesses that generate real cash flows. Many of the companies inside these Swiss and Nordic ETFs — Nestlé, Novartis, Roche, Zurich Insurance, Atlas Copco — fit precisely this mold: established businesses with durable competitive positions and long track records of rewarding shareholders with cash distributions.
Tax Considerations for International Dividend ETFs
International dividend investing adds a layer of tax complexity that U.S.-focused dividend investors should understand. When foreign companies pay dividends, their home country typically withholds a portion of the payment in taxes before it reaches you.
Swiss Withholding Tax
Switzerland imposes a 35% withholding tax on dividends at the statutory level. However, thanks to the U.S.-Swiss tax treaty, American investors are typically subject to a reduced rate of 15%. For ETFs like FLSW and EWL, this treaty-reduced withholding is generally handled at the fund level.
U.S. investors can often claim a foreign tax credit on their U.S. tax return for foreign taxes withheld, which helps offset the drag on after-tax income. The specifics depend on whether you hold the ETF in a taxable account, a traditional IRA, or a Roth IRA — and each account type has different implications.
Swedish Withholding Tax
Sweden’s statutory withholding rate on dividends is 30%, which is typically reduced to 15% under the U.S.-Sweden tax treaty. The same foreign tax credit mechanism applies for U.S. investors holding EWD in a taxable brokerage account.
Investors may want to consider account placement carefully. In a taxable brokerage account, you can claim the foreign tax credit. In a traditional IRA, the tax treaty benefits may apply depending on how the fund is structured. In a Roth IRA, foreign taxes withheld are generally not recoverable, which means international dividend ETFs may be somewhat less tax-efficient in Roth accounts.
Tax rules are complex and vary by individual situation. Consider consulting a qualified tax professional for personalized guidance on international dividend tax treatment.
Risks to Consider
No investment is without risk, and international dividend ETFs carry specific risks that investors should evaluate carefully.
Currency risk is the most obvious. While currency diversification can be a benefit, it also introduces volatility. If the U.S. dollar strengthens significantly against the Swiss franc or Swedish krona, it can erode your returns even if the underlying stocks perform well.
Concentration risk is significant in single-country ETFs. Switzerland’s equity market is heavily concentrated — the top three holdings (Nestlé, Novartis, and Roche) typically represent 35-40% of the Swiss ETFs’ total value. A meaningful setback at any one of these companies would have an outsized impact on the fund.
Geopolitical and trade risks also apply. Switzerland has historically navigated international trade tensions with a degree of neutrality, but the country faced tariff rates as high as 39% from the U.S. during the 2025 trade disputes. Although these were subsequently negotiated down to 15%, trade policy remains a variable that can impact Swiss exporters.
Liquidity risk is most relevant for FLSW given its smaller asset base. Investors trading in larger volumes may find wider bid-ask spreads compared to EWL or broad-market international ETFs.
Lower yields compared to some U.S. dividend strategies should be expected. Swiss and Swedish companies have historically offered moderate yields rather than high yields. Investors looking for current income above 4-5% may find these ETFs insufficient as standalone income generators.
Frequently Asked Questions
Both FLSW and EWL provide exposure to Swiss large- and mid-cap equities and hold very similar top positions (Nestlé, Novartis, Roche). The primary differences are cost and liquidity. FLSW charges an expense ratio of 0.09% compared to EWL’s 0.50%, but EWL has roughly 20 times more assets under management and significantly higher daily trading volume. FLSW also holds slightly more stocks (approximately 58 vs. 46).
Most financial educators would not characterize international dividend ETFs as replacements for a core U.S. dividend portfolio. They are more commonly discussed as complements — providing geographic, currency, and sector diversification alongside existing U.S. holdings. Some investors allocate 10-30% of their dividend portfolio internationally, though the appropriate allocation depends entirely on individual goals, risk tolerance, and financial circumstances.
Several factors contribute to the generally lower trailing yields on Swiss ETFs. Swiss companies like Nestlé, Novartis, and Roche are globally dominant businesses that trade at premium valuations, which mathematically compresses their yield. Additionally, Swiss withholding taxes reduce the distributed income that reaches U.S. investors. However, many Swiss companies have long histories of growing their dividends over time, making them appealing from a dividend growth perspective rather than a pure current income perspective.
Historically, the Swiss franc has tended to strengthen during periods of global economic uncertainty. For U.S.-based investors holding Swiss-franc-denominated assets, this has meant that during market downturns — precisely when investors feel the most pressure — the currency component has often provided a cushion to total returns. This is not guaranteed to continue, but it represents a historically observed pattern spanning over a century.
No. FLSW, EWL, and EWD all trade on U.S. exchanges (NYSE Arca) and are priced in U.S. dollars. You can purchase them through any standard brokerage account, IRA, or Roth IRA — the same way you would buy any U.S.-listed stock or ETF. The foreign currency exposure happens behind the scenes within the fund structure.
This article is for educational purposes only and does not constitute investment advice. Past performance does not guarantee future results. International investing involves additional risks including currency fluctuation, political instability, and differing accounting standards. Investors should conduct their own research and consider consulting with a financial advisor before making investment decisions.
