Agio and Disagio in Swiss Real Estate Funds: Understanding the Premium Before You Invest

Key Takeaways

Definition: The agio is the premium between a listed real estate fund's share price and its net asset value (NAV) – the appraised value of the buildings, less debt and deferred taxes. When the share price falls below NAV, the fund trades at a disagio (discount).
Order of magnitude: At the end of October 2025, the average agio of listed Swiss real estate funds (SWIIT index) stood at roughly 37%, well above its long-term average (~19%) and its ten-year average (~26%). In early June 2026 it was still above 34%.
Part of the agio is structural: daily exchange liquidity, diversification, professional management, favorable taxation, and conservative property appraisals justify a fund share trading durably above the book value of its buildings.
The rest is cyclical: interest rates are the main driver of agio swings. Low rates mean high agios; rising rates compress them, as in the 2022–2023 correction, when the average agio fell to 8.4% and more than half of the listed funds traded at a disagio.
The average hides the dispersion: as of June 30, 2026, our internal database – which tracks 46 funds from their official reports – shows an unweighted median agio of 28%, with extremes running from −16% to +57% and five funds trading at a discount.
A high agio is not automatically "too expensive," and a disagio is not automatically a bargain: a fund's agio must be compared with its own history, its peers (residential vs. commercial), its distribution yield, and the quality of its portfolio.
Key reflex: the higher the agio you pay, the more sensitive the investment is to rising rates or disappointing distributions. The agio is a valuation indicator – not a buy or sell signal on its own.

Introduction

In our article comparing direct property purchase with listed real estate funds, we mentioned a risk specific to listed vehicles: their share price can drift away from the actual value of the buildings they hold, creating an agio (premium) or a disagio (discount).

That gap deserves an article of its own. It is probably the most watched – and most misunderstood – number in the Swiss real estate fund market. Why accept paying 30% more than the buildings are worth? Is a fund trading at a discount a bargain? And what does recent history tell us, from the 2021 peak through the 2022–2023 slump to the spectacular recovery of 2025–2026?

This article aims to give readers the keys to interpreting the agio: its exact definition, its structural and cyclical causes, and a few practical reflexes for using it in an investment decision.

What Are the Agio and the Disagio?

A listed real estate fund holds a portfolio of buildings. Two "prices" coexist at all times for the same fund share:

The net asset value (NAV): the value of the buildings as appraised by independent experts, less mortgage debt and deferred taxes. This is the share's "intrinsic" value, published in the fund's annual and semi-annual reports.
The share price: the price at which the share actually trades on the SIX Swiss Exchange, set every day by supply and demand.

The agio measures the gap between the two:

Agio = (Share price − NAV) / NAV

A worked example: if a share has a NAV of CHF 100 and trades at CHF 125, the agio is 25%. If the same share trades at CHF 90, it shows a disagio of 10%.

Each fund's agio is published in its reports and picked up by most financial platforms; banks and specialized managers regularly publish the market's average agio, usually calculated on the funds in the SXI Real Estate Funds Broad index (SWIIT), which groups the funds listed on SIX that are at least 75% invested in Switzerland.

NAV Is Not an "Objective" Value

Before interpreting the agio, you need to understand what NAV contains – and what it does not.

First, the value of the buildings is an expert estimate, usually established with the DCF method (discounting future cash flows). These appraisals are known to be conservative: they react slowly and only partially to market movements, both up and down. Part of the observed agio may therefore simply reflect a gap between the appraised value and the price those buildings would actually fetch on the market.

Second, NAV is calculated after deducting estimated liquidation taxes – the taxes that would be due if the fund sold all of its buildings. A going-concern fund does not liquidate its portfolio: this deduction, conservative as well, mechanically lowers the NAV and optically inflates the agio. UBS devoted a white paper to the question, concluding that a significant share of the observed premium is "justified" by accounting and tax items rather than by investor exuberance.

In other words: a 25% agio does not mean the investor is "overpaying" for the buildings by 25%.

Why Pay More Than the Buildings Are Worth? The Structural Factors

Beyond the accounting effects, several very real advantages set a listed fund share apart from a directly held building – and investors are willing to pay for them:

Daily liquidity: a fund share sells on the exchange in seconds; a building takes months to sell. That flexibility has value.
Instant diversification: a single share provides access to dozens of different buildings, regions, and tenants.
Professional management: property selection, maintenance, re-letting, and financing are delegated to a specialized team.
Favorable taxation: for funds holding their buildings directly, the corresponding income and wealth are taxed at the fund level and exempt for private investors – an advantage detailed in our previous article.
Legal protection and a safety net: Swiss real estate funds are governed by the Collective Investment Schemes Act (CISA). In particular, investors have the right to redeem their shares at net asset value (less costs) as of the end of a fiscal year, subject to twelve months' notice. This mechanism anchors the share price to NAV over the long run: a massive, lasting disagio eventually creates its own correction.

These factors explain why, over long periods, the market's average agio is positive – around 19% on historical average – rather than zero, as one might naively expect.

Interest Rates, the Cyclical Driver of the Agio

Structural factors explain why an agio exists; they do not explain its spectacular swings. The main cyclical driver is the level of interest rates.

The mechanics are simple. Real estate funds distribute regular income drawn from rents; on the exchange, they behave like yield assets, competing directly with bonds. When rates fall, Swiss-franc bond yields shrink, income-seeking investors shift to real estate funds, demand pushes prices up – and the agio swells. When rates rise, the movement reverses, compounded by more expensive mortgage financing for the funds and pressure on appraisal values.

The Swiss market's recent history illustrates this sensitivity strikingly:


Period	Average agio (SWIIT)	Context
Late 2020 – 2021	Above 40% (all-time peak)	Negative SNB rates, widespread search for yield
August 2023	8.4% – more than half of the funds at a disagio	Rapid rate rises in 2022–2023, exit from negative rates
End of October 2025	~37%	SNB back to a zero policy rate, housing shortage, strong inflows
March 2026	30.2% (a −5.3% correction over the month)	Rising long-term rates (CHF swaps)
Early June 2026	Above 34%	Rebound, record inflows (CHF 3.7 billion in capital increases announced or completed)

The 2022–2023 correction deserves a closer look: in two years, the average agio went from above 40% to below 10%, a level last seen in 2008. Five funds showed discounts of more than 20%. An investor who entered at the 2021 peak suffered that agio compression on top of the change in building values – precisely the risk specific to listed vehicles.

Conversely, agios did not surge uniformly during the 2025–2026 recovery: in early 2026, residential funds traded at average agios above 40% – some products beyond 50% – while commercial funds showed far more modest premiums, around 17–20%. The gap also reflects different distribution yields: roughly 2.1% on average for residential funds versus roughly 3.7% for commercial funds at the end of 2025.

What Our Data Shows: The Dispersion Behind the Average

At Apollo 8, we maintain a proprietary database on listed Swiss real estate funds: our automated AI extraction pipeline reads the official annual and semi-annual reports published by each fund – balance sheets, income statements, NAV per share, distributions, shares outstanding – and cross-references them with SIX prices. To date, the database covers 46 funds and more than 340 official reports analyzed since 2020, in French, German, English, and Italian.

This data lets us look behind the market average. Here is the snapshot as of June 30, 2026, calculated fund by fund from the latest NAV published by each:


Indicator (45 funds, as of June 30, 2026)	Value
Median agio (unweighted)	28.0%
Lower / upper quartile	17.6% / 40.1%
Minimum / maximum agio	−15.7% / +56.6%
Funds at a discount (disagio)	5 of 45

Source: Apollo 8 – NAVs extracted automatically from the latest official reports published by each fund, SIX closing prices as of June 30, 2026; agio = price / published NAV − 1, with no adjustment for distributions made since the report date.

Three observations stand out from these figures:

The median agio (28%) is well below the index premium (~34%). The SWIIT index is capitalization-weighted: the large residential funds, which trade at the richest premiums, pull the average up. The "typical" fund is cheaper than the index suggests.
The gap between segments is massive. The highest agios – between 45% and 57% – belong almost exclusively to residential or mixed funds; the five funds at a discount are commercial or specialized vehicles. The market does not price "Swiss real estate" at a single level: it prices housing scarcity.
Even in a full bull market, discounts exist. A quarter of the funds trade below an 18% agio and five trade below their NAV, even as the index flirts with all-time highs. Talking about "the market's agio" without looking fund by fund throws away most of the information.

How to Use the Agio in an Investment Decision

The agio is neither a green light nor a red light: it is a valuation indicator to be read in context. A few practical reflexes:

Compare the fund's agio with its own history. A fund trading at a 35% agio when its ten-year average is 20% is expensive by its own standard; the same agio for a fund that has always traded between 30% and 45% tells a different story.
Compare with comparable peers. Setting a residential fund's agio against a commercial fund's makes little sense: premium levels, distribution yields, and risk profiles differ structurally. The relevant comparison is within a segment.
Weigh the agio against the distribution yield. A high agio mechanically means paying more for the same rents: with distributions unchanged, the higher the premium, the lower the current yield. That is the central trade-off for an income-oriented investor.
Beware of discounts that look too good. A persistent discount usually has reasons: high leverage, vacancies, an aging portfolio, poor trading liquidity, or uncertainty about valuations. The CISA redemption mechanism limits excesses over the very long run, but it guarantees nothing on a horizon of a few years.
Think in terms of rate sensitivity. Buying at a high agio means accepting greater exposure to rising rates: the 2022–2023 correction showed that agio compression can cost several years of distributions. Sizing the position accordingly – and committing to a long horizon – remains the best protection.

The Indicator's Limits

Three final caveats. First, the market's average agio hides a wide dispersion across funds, as our figures above show: at the same moment, some vehicles trade above +50% and others at a discount. Averages help gauge the general climate, not value a specific fund.

Second, the NAV itself is an estimate, revised periodically. When appraisers mark up building values – as they did in the residential segment in 2025 – the agio contracts optically without the share price moving. A change in the agio can therefore come from the numerator (the price) as well as the denominator (the NAV).

Third, a high agio can stay high for a long time. Current levels are well above historical averages, but they partly reflect a specific environment: a zero policy rate, a structural housing shortage, record inflows. Selling – or refusing to invest – purely because the agio is "above average" would have meant missing most of the 2024–2026 performance. The agio informs the decision; it does not replace it.

Conclusion

The agio is to a listed real estate fund what the price per square meter is to an apartment: an indispensable number that says nothing on its own. Part of the premium pays for very real advantages – liquidity, diversification, taxation, delegated management – and for accounting prudence buried in the NAV. The rest fluctuates with interest rates, sometimes violently, as the 2021 peak, the 2022–2023 slump, and the 2025–2026 recovery have shown.

For investors, discipline means knowing what they are paying for: placing the fund's agio within its history and its segment, weighing it against the distribution yield, and sizing the position according to their tolerance for premium compression. For the broader comparison between listed funds and direct property purchase – diversification, liquidity, taxation, leverage – we refer the reader to our dedicated article.