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Assets raising in Europe: The Swiss market for distribution from golden age to regulatory constraints!

Friday, May 16, 2014

The Swiss market for distribution from golden age to regulatory constraints !

In 1969, Rothschild Geneva was also a pioneer in the fund of hedge funds when they launched Haussman Holdings. Some European investors started to look at hedge funds' returns in the mid 1990s but most institutional investors initiated exposure to hedge funds through funds of funds.

The Swiss private banks and their high ultra private investors spotted early the opportunities to access to the double digit returns of the major big US Global Macro Funds. The founder of EIM, Arki Buisson, has been instrumental in distributing these funds in Switzerland and became legendary for his accesses to the top US managers.

Man Investment, RMF were also pioneers in 1998 when initiating a worldwide distribution of Managed Futures funds and funds of funds. Suddenly the small town of Paffikon, near Zurich, became known worldwide ! and offices started to replace the peaceful grasslands...

Post 2008

Both private and institutional investors started to discover what liquidity risk means when suddenly an estimated 30% of the hedge funds announced gates and side pockets. After 6 years, the market still remembers the hard experience of secondary markets for hedge funds and the difficulty to value some investments. This experience has left traces.

The sell off was dramatic, shortly followed by exposures in Madoff which had about 50% of its assets from Switzerland. The local flavour remained negative on hedge funds but liquid regulated funds started to be in demand from 2010.

The Managed Account model provided an alternative to the funds of funds. At the same period, the Swiss market went through major changes in its positioning a tax heaven for the rich of this world. The Swiss market became quieter for distribution of hedge funds.

However, performances continue to attract high net worth investors. The distribution of funds in Switzerland might be more discreet and confidential but still remains a key market for the top 10 hedge fund managers as well as the prime UK managers with their strategies in UCITS format. The Marshall Wace, Renaissance, Millenium, Winton or Landsdown have been mentioned as very successful fund raisers in Switzerland. The two major Swiss banks and the well known private banks such as Pictet or Lombard Odier remain the biggest allocators for their wealth management arms.

This article was published in Opalesque UCITS intelligence.
Opalesque UCITS intelligence
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