The Institute for Financial Services Zug IFZ, part of Lucerne University of Applied Sciences and Arts, has produced the first comprehensive study on asset management in Switzerland (see Downloads) in conjunction with the Asset Management Platform Switzerland. Banks, fund management companies, securities dealers and FINMA-supervised asset managers had assets under management totalling CHF 2,208 billion at the end of 2017. This was determined in a survey focusing on Switzerland as an asset management production location. In other words, these are the assets managed by asset management companies in Switzerland for domestic and foreign clients. CHF 1,261 billion of this was held in collective investment schemes, CHF 947 billion in institutional mandates. The total figure represents an increase of 12% year-on-year (see Chart).
“The current figures are based on data from 32 respondents covering roughly 80% of the overall market, which we extrapolated. Asset management is a vital mainstay of the Swiss financial sector and also important for the economy as a whole, especially in terms of funding pensions and the real economy, since the banks are increasingly reluctant to lend in view of the high cost of capital,” says Lorenz Arnet, CEO of the Asset Management Platform Switzerland.
High ranking internationally
The authors of the study produced a global ranking of asset management centres, also known as hubs, to assess the competitiveness of Swiss asset management in an international context (see Chart). The ranking is based on 68 indicators of political, economic, social and technological framework conditions. “We looked at political stability, the efficiency of authorities and the number of graduates in business, academia and engineering, to name just a few examples,” explains Thomas Ankenbrand, co-author of the study at Lucerne University of Applied Sciences and Arts. He believes that Switzerland has a positive environment for asset management, with Zurich placed fourth among the 35 cities studied behind New York, London and Singapore in first place. Geneva occupies eighth place behind Boston, San Francisco and Washington. The two Swiss cities still have room for improvement, particularly when it comes to economic and technological aspects.
Regulation poses greatest challenge
While the hub ranking attests to Switzerland’s positive environment, asset managers operating in Switzerland face a range of different challenges. Foremost among these is regulation, followed by difficulties in acquiring new clients, the pressure of competition, the availability of skilled workers and high production and salary costs. Access to external funding, meanwhile, does not pose a problem for asset managers as their capital requirements are much lower than those of banks and insurers due to the fact that they are not involved in balance-sheet business.