Alternative Funds

Author:Dr. Rashid Bahar and Martin Peyer
Profession:Baer & Karrer
 
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  1. General

    1.1 General Overview of Jurisdiction

    Switzerland is an attractive jurisdiction thanks to the stability of its economy and legal framework, as well as its extensive and reliable infrastructure and developed financial sector. Thanks to a strong education system and attractive living conditions, it is also able to train, retain and attract a talent pool.

    Switzerland is primarily an important hub for the distribution of alternative investment funds. It is home to a number of sophisticated investors interested in alternative investments: pension funds, large insurers and re-insurance companies, global wealth managers and large institutional investors, as well as a significant number of high net worth individuals and family offices. According to a report prepared by Swiss Banking and Boston Consulting Group, a high proportion of Swiss investment managers invest in alternative asset classes (about 18% of assets managed in Switzerland in 2017; see Swiss Banking and Boston Consulting Group: Switzerland - A strong hub for investment management, 2018). Allocations tend to focus on real estate and, to a lesser extent, hedge funds. By contrast, private equity, commodities, infrastructure and other asset classes are less common, although there is increasing attention for infrastructure and private debt investments.

    Furthermore, a number of alternative investment fund managers are based in Switzerland. These actors are focused on hedge funds and private equity. Based on the annual report of the Swiss Financial Market Supervisory Authority (FINMA) for 2018, there are 212 licensed managers of collective investment schemes. This figure arguably understates the number of alternative investment fund managers, since financial institutions that are licensed as a fund management company, a bank or a securities dealer can also manage alternative investment schemes without requiring this licence. Furthermore, asset managers can also operate with a business model that does not necessarily require a licence (eg, if they only intervene in an advisory role).

    By contrast, Switzerland is less attractive than some jurisdictions for setting up an alternative investment fund, eg, the Cayman Islands, Ireland or Luxembourg. As per year-end 2018, there were 50 real estate funds and 66 so-called other funds for alternative investments.

  2. Funds

    2.1 Types of Alternative Funds

    As mentioned above, the number of alternative investment funds domiciled in Switzerland is...

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