Zurich, Switzerland

Leaving Montreal weather with temperatures hovering around minus 20 degrees centigrade is easy. Most Canadians head south to avoid the cold; I head to Switzerland.

Of course, Zurich isn’t exactly Miami Beach. But the moment you step outside Zurich Klöten Airport, you immediately inhale that fresh, soothing Alpine air. The Swiss are so environmentally conscious that Lake Zurich is clean enough to drink. Now that’s clean.

The Swiss franc (CHF) has been the strongest currency in Europe since the advent of the credit crisis. The EUR has been mired in a bear market against the Swissie since 2007 and shows no signs of relenting, even though there’s nothing more the Swiss would like than to have a weak currency for a change, if even only temporarily.

In 2009 and 2010, estimates point to the Swiss National Bank, or SNB, spending more than $11 billion francs trying to halt the franc’s appreciation. That failed.

What’s truly amazing about the CHF is why investors run to a currency that pays just 17 basis points (0.17%) on 3-month money and 1.88% on ten-year government bonds?

The Safe-Haven Currency

At first glance, there isn’t an attraction there to draw funds to a miniscule-yielding currency. But Switzerland has always been the exception; a safe-haven you count on to protect and even grow your fiat money if you choose to convert that paper to the mighty franc in times of market uncertainty.

Another curious anomaly about Switzerland’s economic performance is the value of her exports, which actually grew an estimated 12.8% in 2010 compared to 2009, according to Theodora.com. That’s an impressive result, considering the franc has surged 25% against the dollar since February 2009 and 15% vis-à-vis the EUR over the same period. Usually, a strong currency will crimp exports; but not in Switzerland’s case.

The European Central Bank, or ECB, might be at the cusp of hiking rates in April to stem inflation’s rise, mainly due to soaring oil prices. That might knock some air out of the franc.

Still, for long-term investors looking to park some funds in a currency that actually reduced its net debt in 2010, I like the Swiss franc. I’d shun bonds and instead, go with Nestle SA (Zurich-NESN), which recently hiked its dividend by 15.6% to yield 3.6%. The stock is bordering a 52-week low in Zurich and sells at just 5.1 times trailing earnings.