Investment challenges in 2022 are still felt in the Swiss fund market, with market volume waning owing to performance losses, writes Benjamin David.
At the end of the fourth quarter of 2022, investors in Switzerland invested CHF 1,325 billion in investment funds, a fall of CHF 209.6 billion or -13.7% in 12 months. In a year marked by the war in Ukraine, inflation and the interest rate turnaround, the volume in the Swiss fund market in 2022 declined to mid-2019 levels.
According to Asset Management Association Switzerland (Amas), the decline was primarily caused by performance losses, accounting for 204.6 billion Swiss francs or 13.3%. In the association’s review of the year, the trade body said 1,325 billion Swiss francs were held in Swiss funds as of December 31, 2022, down from 1,534 billion Swiss francs 12 months earlier.
Nevertheless, net money outflows remained within narrow limits throughout the year, amounting to 5 billion Swiss francs. A trend reversal became apparent during the fourth quarter with net money inflows, which also affected equity and bond funds.
Overall, the Swiss fund market recorded inflows of CHF 4.6 billion in the fourth quarter of 2022. Money market funds remained in demand throughout the entire investment year. Investors’ need for security and liquidity manifested in net inflows of 20.1 billion Swiss francs.
“In one of the most difficult investment years ever, Switzerland as a fund location proved its strengths, despite the declining volume. Investors remained calm and adjusted their asset allocation accordingly despite the, at times, severe market distortions,” says Adrian Schatzmann, managing director of Amas. In the fourth quarter and also at the beginning of the year, a higher willingness to take risks could be “observed again”.
“Investors remained calm and adjusted their asset allocation accordingly despite the, at times, severe market distortions.”
The market distortions in the two largest asset classes regarding market shares, equities and bonds left the deepest traces. The performance of equity funds – the largest proportion of Swiss funds with 42.6% of the market – fell by 20.7% and bond funds by 12.3%.
Net money outflows totalled CHF 7.3 billion and CHF 218.0 billion, respectively. With the exception of money market funds, only mixed-asset funds (+CHF 2.8 billion) and real estate funds (+CHF 141 million) received net money inflows over 2022.
Asset Management Association Switzerland also notes that money market funds lost 4,1% over 2022. Only commodity and real estate funds had positive performance in 2022 (0.7% and 21.7%, respectively), as did alternative investments (7.2%). It also says that UBS remained at the top of the Swiss fund provider hierarchy, followed by Credit Suisse and Swisscanto, with Swisscanto, BlackRock and Pictet being highlighted as having performed particularly well.
Amas also highlighted noteworthy index and currency performance up to the end of 2022: Dow Jones -8.78%, S&P 500 -19.44%, Euro Stoxx 50 -11.74 %, SMI -16.67%, SBI -12.10%, and Bloomberg Barclays US Aggregate Bond Index -13.01%. The EUR lost against the CHF by 4.47%, while the USD gained 1.49% against the CHF.
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