8 Sep 2010
Despite the financial crisis and scandals, the hedge fund industry in Switzerland is well on track. Clear trends include a shift from funds of hedge funds to single hedge funds, the new position of institutional investors as the most important client segment and a better perception of the Swiss financial centre. In its second independent survey on the topic, the Centre for Alternative Investments & Risk Management of the ZHAW illustrates the significance and prospects of Swiss single hedge funds. The study was conducted with the support of Wegelin & Co. Private Bankers.
With a market share of 4%, the Swiss Single Hedge Funds universe remains Europe’s third largest behind London and Sweden, as it was two years ago. Following up on its first survey from 2008, the comprehensive study by the ZHAW addresses the following issues:
The funds interviewed in the survey expect growth of the single hedge fund market to accelerate. A higher level of investor expertise was considered a particularly significant factor, with savvy investors preferring direct investments in single hedge funds to funds of hedge funds. Institutional investors value the transparency, liquidity and better moni-toring of the strategies as well as the lower costs. The launch of UCITS-conform single hedge funds and decreasing performance fees have demanded changes to business models and much potential remains to be realised. The study also identifies the growing attractiveness of Luxembourg and Liechtenstein as fund domiciles.
Two years ago, high-net-worth individuals constituted the largest single investor group in single hedge funds. In the meantime, the situation has changed: institutional investors now make up around 40% of the client base (2008: 20%) and represent the most signifi-cant client group. Switzerland also provides the largest investor base.
Around two thirds of the hedge fund businesses surveyed were launched after 2004 and over 20% of participants had established their businesses after 2006, showing that the industry is by and large a young one. Given the typical partnership characteristics of sin-gle hedge funds, it is hardly surprising that 35% of those interviewed operate in Switzer-land with a team of five or less persons only. The financial crisis has, however, left a significant mark: around one third of the participants from the first survey have either moved away from the single hedge fund business or ceased operating altogether.
With an influx of some large hedge fund representatives from the UK, Geneva’s reputa-tion as the “hot spot” for Swiss single hedge funds has been accentuated in the last 12 months. At the same time, Zurich has also become a growing hub for single hedge funds. Feelings towards Switzerland as a financial centre have also improved signifi-cantly: almost half of those interviewed cited an attractive tax system as a positive factor in choosing Switzerland. Further important reasons were personal considerations in re-gard to the high standard of living.l
With a market share of 4%, the Swiss Single Hedge Funds universe remains Europe’s third largest behind London and Sweden, as it was two years ago. Following up on its first survey from 2008, the comprehensive study by the ZHAW addresses the following issues:
The funds interviewed in the survey expect growth of the single hedge fund market to accelerate. A higher level of investor expertise was considered a particularly significant factor, with savvy investors preferring direct investments in single hedge funds to funds of hedge funds. Institutional investors value the transparency, liquidity and better moni-toring of the strategies as well as the lower costs. The launch of UCITS-conform single hedge funds and decreasing performance fees have demanded changes to business models and much potential remains to be realised. The study also identifies the growing attractiveness of Luxembourg and Liechtenstein as fund domiciles.
Two years ago, high-net-worth individuals constituted the largest single investor group in single hedge funds. In the meantime, the situation has changed: institutional investors now make up around 40% of the client base (2008: 20%) and represent the most signifi-cant client group. Switzerland also provides the largest investor base.
Around two thirds of the hedge fund businesses surveyed were launched after 2004 and over 20% of participants had established their businesses after 2006, showing that the industry is by and large a young one. Given the typical partnership characteristics of sin-gle hedge funds, it is hardly surprising that 35% of those interviewed operate in Switzer-land with a team of five or less persons only. The financial crisis has, however, left a significant mark: around one third of the participants from the first survey have either moved away from the single hedge fund business or ceased operating altogether.
With an influx of some large hedge fund representatives from the UK, Geneva’s reputa-tion as the “hot spot” for Swiss single hedge funds has been accentuated in the last 12 months. At the same time, Zurich has also become a growing hub for single hedge funds. Feelings towards Switzerland as a financial centre have also improved signifi-cantly: almost half of those interviewed cited an attractive tax system as a positive factor in choosing Switzerland. Further important reasons were personal considerations in re-gard to the high standard of living.l
