May 2016

ASSOCIATION COLUMN: Swiss asset management – review and outlook

Markus Fuchs2015 proved an eventful year for global markets, in which investors’ nerves were tested to the limit throughout.

Pronounced currency fluctuations, several bond market flash crashes, the crisis in Greece, the Chinese stock market’s rollercoaster ride, the US interest rate hike and terrorist attacks across the globe combined to create a highly volatile environment, with hefty price swings. Achieving satisfactory returns proved to be no easy task. 

2015 was an eventful year for Switzerland’s funds and asset management industry too. One of the year’s defining events was the abandonment of the Swiss franc minimum exchange rate versus the euro in January. Fund volumes managed to break through the 900 billion franc threshold, but were unable to remain above it for long. 

Total volume stood at around 891.3 billion francs at the end of December 2015, a quarter-on-quarter increase of 32.9 billion francs (+3.83%). 

Broken down by asset class, equity funds still have the largest share at about 41%, followed by bond funds with around 31%. Asset allocation funds remain in third spot with just over 12%. At the end of 2015, there were 8,740 funds approved for public distribution in Switzerland, a net increase of 524. 

Of these, 1,542 (+27) were funds under Swiss law and 7,198 (+497) were funds under foreign law, the latter category being dominated by Luxembourg-law products (up 331 to 4,870). The ratio of foreign funds to collective investment schemes under Swiss law has remained fairly constant at around 4:1 over recent years. 

The securities holdings in client custody accounts at Swiss banks were rather volatile over the course of 2015, reflecting the performance of the markets. According to the Swiss National Bank’s statistics, the figure stood at 5.5 trillion francs at the end of December 2015. 

In respect of fund holdings, only resident clients posted an increase, up around 7.6% to 1,058 billion francs. Their non-resident counterparts had fund holdings totalling 787 billion francs at the end of December, which translates to a drop of 3%.

On the regulatory front, SFAMA’s focus was and remains the Financial Services Act (FinSA) and Financial Institutions Act (FinIA) projects. 

We regard the dispatch adopted by the Federal Council as an opportunity for Switzerland as a location, since these two laws will make a decisive contribution to safeguarding both the ability of Swiss providers to export their products and services, and thus also their future competitiveness. 

During parliamentary debates in the course of this year, we will remain committed to ensuring the issues raised by our industry are heard, and we will be highlighting the crucial importance of
asset management. 

EXPORTABILITY
As a small and open economy, Switzerland is dependent on its financial firms being able to offer their products and services abroad. The FinSA and FinIA are a key prerequisite for this. The global market offers considerable potential for the Swiss financial sector, with its strong infrastructure. 

An essential requirement for the exportability of Swiss financial services and products is that Swiss financial market law be in line with international standards, specifically those of IOSCO and the OECD. These central standards include both appropriate conduct rules (FinSA) and internationally recognized prudential supervision of all asset managers (FinIA). 

Anyone who wants to export has to play by the international rules, and the FinSA and FinIA will both make a considerable contribution in this regard.

Markus Fuchs, CEO, Swiss Funds & Asset Management Association (SFAMA)

©2016 funds europe

Sponsored Profiles

SPONSORED FEATURE: Smarter than beta

Jun 14, 2017

‘Smart beta’ investing is rapidly becoming a popular alternative to both conventional passive management and traditional active management.

SPONSORED FEATURE: Smart beta: Unlocking key drivers of return

Jun 14, 2017

Manuela Sperandeo, iShares Head of Specialist Sales EMEA, tells Funds Europe how investors can leverage smart beta strategies to target numerous outcomes.

SPONSORED FEATURE: Minimum variance indices: Rewriting the rules

Jun 14, 2017

The FTSE Russell indices tracked by lyxor lead to fewer specific risks, fewer valuation and crowding issues and more consistent performance.

SPONSORED FEATURE: The reflationary environment

Jun 06, 2017

Funds Europe talks to Andreas Wosol about the implications of a return to reflation and why the value part of the European equity market could support investors in such an environment.

Executive Interviews

INTERVIEW: Finding managers that can (and do)

Apr 18, 2017

Fabrice Kremer, a fund selector at Banque de Luxembourg Investments, has berated fundamental managers for failing to beat indices, but he remains committed to active funds. He speaks to Nick...

JERSEY INTERVIEW: ‘A steady sort of place’

Mar 21, 2017

The chief executive of Jersey Finance is keen to portray the island as a stable, trustworthy jurisdiction. He talks to George Mitton.

Roundtables & Panels

TRENDING: Smart beta indices continue onward march

Jun 14, 2017

We asked five investment experts how smart beta indices have performed against cap-weighted indices over the past year and what the investment outlook suggests about the prospect for different investment factors.

SMART MONEY: Following the smart money

Jun 14, 2017

We asked six investment professionals about the emphasis they are placing on smart beta and active ETFs and how platforms are adopting these products.