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(Bloomberg) -- Swiss stocks are once again becoming investor favorites.

With elections in neighboring France stoking concern over an end to the current market calm, traders are seeking the refuge of the defensive-heavy Swiss Market Index. With a 4 percent advance, the gauge has become this year’s best performer among major European equity measures. At the same time, the cost of hedging against stock swings has dropped from a high, reaching in February its lowest level since October relative to protection prices on the Euro Stoxx 50 Index.

“Investors are testing again Switzerland’s reputation as first port of call in a flight to quality,” said Alex Neil, head of equity and derivatives trading at EFG Bank in Geneva. “There’s a perfect storm of perceived political risks just around the corner, and Switzerland has an increasingly robust economic and currency backdrop.”

Switzerland’s economy is expected to expand at a faster pace in 2017, while growth in the euro zone is forecast to slow down. At the same time, a weaker franc has boosted the appeal of the nation’s shares. Those reasons, in addition to the French vote, have led to increased confidence in the country’s stock market, pushing bets for SMI swings in the next two months about 24 percent lower than for the Euro Stoxx 50.

Swiss stocks saw a similar revival in the aftermath of the British vote to exit the European Union, with investors sending their valuations to the highest since 2013 relative to regional equities. The optimism didn’t last, and the SMI underperformed the Euro Stoxx 50 for a second year. Now, companies in the SMI trade at 16.9 times estimated earnings, in line with their five-year average relative to those on the Euro Stoxx 50.

To contact the reporter on this story: Roxana Zega in Zurich at rzega@bloomberg.net.

To contact the editors responsible for this story: Celeste Perri at cperri@bloomberg.net, Cecile Vannucci, Namitha Jagadeesh

©2017 Bloomberg L.P.

Bloomberg