Risk. Without another full-blown financial crisis, could most parts of the financial markets be any riskier right now?

Hence the perennial search for assets to add which serve to reduce risk.

You might like to take a look at this chart. Hint: you can view without downloading.

Sorry, it starts from last year and ends in April ’11, but I still think it’s instructive.

Using Bloomberg data, Citi put together a model of a 50-50 EUR+CHF basket and a 50-50 EUR+SEK basket — the data are indexed to March 2010 =100.

Look at the way that up to Spring 2010 – inception of ‘peripheral euro zone crisis’ – the trades are like a band of brothers.

After that, EUR+CHF became the clear outperformer.

Bearing in mind long-term USD weakness and hence the need to underweight USD, it’s arguable that sovereign and ‘real money’ [no really! Actual cash!] accounts can long Europe [which might be unavoidable – see ‘real money’] short USD and circumvent the ‘peripheral crises to a great extent.

EUR/CHF traded 1.21901 +0.92% on the day at 1822 GMT

ThSM