Swiss fund industry receives currency boost but muted inflows

A strengthening Swiss franc might have hurt the country’s exporters, but it helped its fund market hit new asset peaks of nearly CHF 700bn in July, after it already reached a five-year high in June.

The industry reported a growth in the value of its assets of CHF20.4bn in July, bringing the total to CHF 697.1bn, according to Swiss Fund Data and Lipper.

This followed the industry reporting a five-year high level of assets for June, of CHF 676.7bn.

The vast majority of the increase in value of Swiss fund assets in July came from a mixture of market appreciation, and a strengthening of the Swiss franc – the currency in which assets are reported – against major currencies in which many of the country’s managers’ investments are denominated.

The Swiss Funds Association noted its industry’s continued growth in July came partly from positive performance of the exchanges, as the Swiss Market Index was up 5.53% during July, while the S&P 500 index of US shares is 14.37% higher so far this year.

Matthäus Den Otter, CEO of the SFA, said: “Currency effects – the strongly weakened Swiss franc against other currencies – played a key role in the marked increase in fund assets”.

Inflows accounted for about 10% (CHF2.4bn) of the total increase in volume of Swiss fund assets in July.

At a strategy level, the biggest losers of money last month were asset allocation funds with rigid equity weightings as allocators are withdrawing their assets after the funds failed to deliver the expected returns.

Den Otter said: “Investors are increasingly taking the initiative themselves when it comes to asset allocation and are less keen to operate within the risk models set by banks.”

Instead he sees them “giving preference to funds with more flexible allocation models.”

US corporate bonds with low credit ratings have been the clear winners as they took in proportionally more fresh business than other strategies, as investors have been losing faith in other bond alternatives.

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