The Swiss asset management industry continues to be on a growth path despite COVID-19. AuM managed in Switzerland grew by 10.6 percent in 2020 and reached a new high in domestically managed assets of CHF 2.79 trillion (see figure 1). This increase in AuM (+ CHF 268 billion) is driven by organic growth in the form of high net inflows (+ CHF 101 billion, 4.0%) and investment performance (+ CHF 167 billion, 6.6%) due to recovering financial markets in the second half of 2020.
AuM managed in Switzerland grew by 10.6 percent in 2020 and reached a new high in domestically managed assets of CHF 2.79 trillion (Figure 1: AuM managed in Switzerland for institutional clients and CIS from 2016 to 2020, in CHF billion; click to enlarge).
A more long-term view shows that between 2016 and 2020 the AuM managed in Switzerland for domestic and foreign clients grew at a compound annual growth rate of 9.1 percent where roughly one third was attributable to net new assets (2.8 percent) and about two thirds (6.3 percent) to performance. The net revenue pool of the Swiss asset management industry is estimated to be CHF 15.67 billion with profits of CHF 4.10 billion.
Asset management plays a significant role
“Asset management is a key pillar of the Swiss financial sector and important for the economy as a whole, since asset managers provide an investment channel between financial markets and the real economy which stimulates long-term economic growth and creates jobs”, says Jürg Fausch, economist and lead-author of the study at Lucerne University of Applied Sciences and Arts. “Asset managers are crucial in managing the savings of millions of people in Switzerland and abroad and contribute to the sustainability of the pensions system by generating returns on these savings” comments Adrian Schatzmann, CEO of the Asset Management Association Switzerland.
Switzerland is attractive as an asset management hub for clients abroad
Of those CHF 2.79 trillion in assets managed in Switzerland, about 35 percent are managed for institutional contracting clients abroad. The volume of “export” of asset management services illustrates the demand for Swiss products and the internationally recognized expertise of the asset management industry in Switzerland. Overall, from 2017 to 2020, the share of AuM managed on behalf of foreign institutional clients increased by 10 percentage points from 25 percent to 35 percent (see figure 2). Our annual hub ranking, which measures the relative competitiveness of major international asset management hubs, shows that Zurich and Geneva further improved their already favorable ranking position in a year-on-year comparison and are now placed second and fourth, respectively (see figure 3).
Overall, from 2017 to 2020, the share of AuM managed on behalf of foreign institutional clients increased by 10 percentage points from 25 percent to 35 percent (Figure 2: Share of AuM managed on behalf of domestic and foreign institutional clients from 2017 to 2020).
“To keep a competitive edge in a global industry, it is vital that Switzerland is taking the required efforts to maintain its attractiveness as a business location. An internationally competitive regulatory framework and a non-discriminating access to international markets are key requirements for further growth given the competitive and rather saturated domestic market” says Jürg Fausch.
The annual hub ranking, which measures the relative competitiveness of major international asset management hubs, shows that Zurich and Geneva further improved their already favorable ranking position in a year-on-year comparison and are now placed second and fourth, respectively (Figure 3: Asset management hub ranking; click to enlarge).
Sustainable investment is evaluated as the most important opportunity in the industry
Sustainable investment commonly refers to the incorporation of environmental, social and governance (ESG) factors into the investment process. It is one of the key trends in the asset management industry and evaluated as the biggest opportunity for Switzerland by the surveyed asset managers. A persistently strong client demand, risk considerations and regulatory requirements are key drivers for this development. “Switzerland has tremendous potential as a center of excellence in sustainable investment. Overall, asset managers could help fighting climate change and facilitating the transformation to a more sustainable economy by directing capital flows to sustainable investments” says Adrian Schatzmann.
Bank-owned firms are the largest asset managers in terms of total AuM managed in Switzerland
In this year’s edition of the study rankings of the participating Swiss-based asset management firms were introduced along various dimensions. With respect to total assets managed in Switzerland bank-owned firms are the largest asset managers (see figure 4). UBS Asset Management (1), Credit Suisse Asset Management (2) and Swisscanto Invest by Zürcher Kantonalbank (3) are managing combined about CHF 800 billion of AuM by the end of 2020.
With respect to total assets managed in Switzerland bank-owned firms are the largest asset managers (Top 10 asset managers regarding total AuM (in CHF billion), managed in Switzerland).