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For the prudent investor, a modern-day governance for the settlement of responsibilities at a large and complex organization is important. States are non-profit cooperatives built for eternity. They are led by citizens as their principal, the highest authority, in which each citizen only has a stake. They are being managed strategically and operatively by politics and the administration as the entrusted agent.

The cooperation of parliament, government and administration as an agent chain however doesn’t satisfy the claim of a modern governance, which hurts accountability.

«Virtually no or only poor controls – random at best»

Parliaments are far too operative, the government acts mostly without having a suitable qualification to be a strategic or operative management committee, and there are no responsible executives in administration.

Each ministry works as a chamber with countless departments, which as a consequence means that there is no complete overview, overheads aren’t being redistributed and that the state in most cases harbors the naïve belief it is competitive with the private sector, at least where there is competition. This is complete rubbish, if you compare its partial costs, without the overheads and capital costs, with the full costs of the private sector.

Good governance is a mark of independent control. In most countries, control is independent on paper only and mostly so poorly outfitted that it manages on a random basis at best, not as a system of powerful oversight and surveillance.

Sustainability gurus for instance will include climate and human rights issues in their analysis. I won’t go that far here, but do conclude that, from my point of view, government bonds have no place in a portfolio, even if they have a higher yield.

Philipp Weckherlin co-founded CE Asset Management, which merged last July with Hérens Partners. Since then, the firm has been known as Hérens Quality Asset Management and is active in prominent international equity investor. Weckherlin is also an adviser to fintech firm Creditgate24. After obtaining a PhD from the University of St. Gallen, he worked in the banking industry as well as for consulting firms Boston Consulting Group and Roland Berger.

Previous contributions: Rudi Bogni, Peter Kurer, Oliver Berger, Rolf Banz, Dieter Ruloff, Werner Vogt, Walter Wittmann, Alfred Mettler, Peter Hody, Robert Holzach, Craig Murray, David Zollinger, Arthur Bolliger, Beat Kappeler, Chris Rowe, Stefan Gerlach, Marc Lussy, Nuno Fernandes, Richard Egger, Maurice Pedergnana, Marco Bargel, Steve Hanke, Andreas Britt, Urs Schoettli, Ursula Finsterwald, Stefan Kreuzkamp, Oliver Bussmann, Michael Benz, Peter Hody, Albert Steck, Andreas Britt, Martin Dahinden, Thomas Fedier, Alfred Mettler, Brigitte Strebel, Peter Hody, Mirjam Staub-Bisang, Nicolas Roth, Thorsten Polleit, Kim Iskyan, Stephen Dover, Denise Kenyon-Rouvinez, Christian Dreyer, Kinan Khadam-Al-Jame, Robert Hemmi, Anton Affentranger, Yves Mirabaud, Katharina Bart, Frédéric Papp, Hans-Martin Kraus, Gerard Guerdat, Didier Saint-Georges, Mario Bassi, Stephen Thariyan, Dan Steinbock, Rino Borini, Bert Flossbach, Michael Hasenstab, Guido Schilling, Werner E. Rutsch, Dorte Bech Vizard, Adriano B. Lucatelli, Katharina Bart, Maya Bhandari, Jean Tirole, Hans Jakob Roth, Marco Martinelli, Beat Wittmann, Thomas Sutter, Tom King, Werner Peyer, Thomas Kupfer, Peter Kurer, Arturo Bris, Michel Longhini, Frederic Papp, Claudia Kraaz, James Syme, Peter Hody, Claude Baumann, Dennis Larsen, Bernd Kramer, Ralph Ebert, Marionna Wegenstein, Armin Jans, Nicolas Roth, Hans Ulrich Jost, Patrick Hunger, Fabrizio Quirighetti, Claire Shaw, Michael Welti, Peter Fanconi, Alex Wolf, Dan Steinbock, Patrick Scheurle, Claude Baumann, Sandro Occhilupo, Claudia Kraaz, Will Ballard, Michael Bornhäusser, Nicholas Yeo, Claude-Alain Margelisch, Jean-François Hirschel, Jens Pongratz. and Samuel Gerber.