Switzerland has long been an offshore haven in the heart of Europe, often running money in offshore funds for anonymous clients. As such, its fund managers did not have to submit to formal regulation by their Financial Market Supervisory Authority (FINMA), while few did.
Such views led Mauceri to create aUcits framework. By December 2010, it launched a rules-based, diversified fund of Ucits managers, based on an index maintained by Swiss manager Alix Capital.
Louis Zanolin, Alix’s founder, says the contraction of the offshore model does not equate to the death of the Swiss fund industry, but to its transfer with much the same strategies to an increasingly transparent environment.
Andre Keijsers, head of corporate strategy at Gottex Fund Management Holdings, says his firm feels “regulation is a positive thing”, though so far the vast majority of Swiss managers are outside the regulatory net.
Gottex would also be comfortable with FINMA regulating Swiss managers in general, Keijsers says, but notes a few important caveats.
He says some form of de minimis rule allowing very small managers not to be caught up “would be practical”.
The AIFMD contains some partial exclusions – for instance, for funds with less than €100m, or €500m for unleveraged funds with long-term investment horizons – but none is currently foreseen for the Swiss rules.
Keijsers adds FINMA’s proposal to compel managers to have a local distribution partner in Switzerland with certain liabilities and overly strict rules is something that “could deter foreign managers from distributing in Switzerland”.
In the case of funds of funds, this could act to the advantage of larger players such as Gottex, which is able to shoulder such extra requirements.
He says: “It may raise barriers to entry to Switzerland for smaller funds of funds, which may want to distribute, but find hiring local representatives may not be cost competitive.”
Keijsers expresses concern, however, about the currently envisioned concept to stop newly regulated Swiss managers from distributing funds overseas, unless FINMA has co-operation agreements with the foreign watchdog.
He notes this would be harsher than AIFMD, which only prevents inbound distribution where such co-operation agreements are not in place. He points to potential difficulty for Swiss managers selling funds in Asia or the Middle East.