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The online magazine of the Swiss Bankers Association
2018/09/27 04:05:00 GMT+2

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Asset management in Switzerland: growth in assets and good general conditions

Asset management in Switzerland: growth in assets and good general conditions

The first comprehensive study of asset management in Switzerland shows that the industry manages assets totalling CHF 2,208 billion (up 12 % on the previous year) and enjoys good general conditions in international terms. Increasing regulation and acquiring customers are regarded as the biggest challenges.

The Institute of Financial Services Zug IFZ, part of Lucerne University of Applied Sciences and Arts, has worked with the Asset Management Platform Switzerland to produce the first comprehensive study of asset management in Switzerland. Banks, fund management companies and securities dealers, as well as asset managers regulated by FINMA, managed assets amounting to CHF 2,208 billion as at the end of 2017. This was established in a survey about Switzerland as an asset management production location. These are assets, then, that are managed by asset management firms in Switzerland for clients in Switzerland and abroad. Of this total, CHF 1,261 billion was accounted for by collective investment schemes and CHF 947 billion by institutional mandates. It equates to an increase of 12 % compared to the previous year (see Figure 1).

Major economic importance

The current numbers are based on data from 32 participants, representing around 80 % of the total market, and extrapolation of these data. The large volume of assets under management shows that asset management is a key component of the Swiss financial centre and has major economic importance. That is particularly true with regard to the financing of pension provision and the real economy.

High international rankings

In order to evaluate the competitiveness of asset management in the international context, the authors of the study drew up a global ranking for asset management centres, or hubs (see Figure 2). The ranking is based on 68 indicators that show general political, economic, social and technological conditions. For example, political stability, the efficiency of public authorities and the number of graduates in economics, science and technology were considered. According to this ranking, the industry in Switzerland enjoys good general conditions: out of 35 hubs investigated, Zurich was placed fourth behind New York, London and top-ranking Singapore. Geneva was next in eighth place behind Boston, San Francisco and Washington. The two Swiss hubs have room for improvement in terms of the economic and technological criteria in particular.

Regulation as the biggest challenge

Even if Switzerland’s hub ranking attests to good general conditions, asset managers operating in Switzerland are faced with various challenges. Regulation is seen as the biggest one, followed by difficulties in acquiring new clients, competitive pressure, the availability of suitably qualified employees, and high production and wage costs. On the other hand, access to external financial resources does not present any problems for asset managers because capital requirements are much smaller compared to those in banking and insurance, since asset managers are not involved in balance sheet transactions.

 

Assets under management in Switzerland in the asset management industry, in CHF billions

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Asset management hub ranking: comparison of 35 hubs with regard to general conditions for asset management companies

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