Success factors for distribution in Switzerland
Interview with Daniel Haefele of ACOLIN Fund Services in Zurich – Why should fund managers in the UK consider Switzerland?
The Swiss financial centre is attractive to both international and domestic investors alike. As of the end of 2010, assets under management in Switzerland totaled around CHF5,500bn, of which slightly more than half were invested by foreign clients. At the same time, competition is intense: more than 670 banks and securities dealers sell almost 7,500 funds.
Which market segments should fund managers target?
Market entry is fastest if you have a sales strategy detailing your target groups and the appropriate products for them. Swiss pension fund trustees, for example, have different requirements and incentives to portfolio managers in private banks. Differentiating between wholesale (into wealth management) and institutional clients is essential for any business plan.
Is it necessary to have a UCITS range of products?
Private placements with institutional investors are certainly possible with non-UCITS funds, however, pension funds in particular have stepped up their demands as to the regulation of funds they would invest in. Today, trustees in the board of a pension fund will more often than not ask for completely transparent and regulated financial products.
Which products will sell in Switzerland?
Daniel Haefele: Currently, there is a lot of demand by Swiss investors for global asset allocation modules. Also, many clients are searching for a substitute for fixed income strategies which reduce volatility. With regards to the types of funds being launched, there are a couple of key trends. One is the desire to replace traditional bond funds with Emerging Market high yield, local currency products and fixed income absolute return funds. Switzerland has traditionally been a hub for Emerging Markets. On the equities side, specialised US and European equity funds are gaining momentum.
Is cross-border distribution an option?
From our experience, a committed sales professional in Zurich or Geneva can work wonders in the Swiss market given sufficient time and resources. To build awareness and create interest for your products, you will need about a year. You can expect to see inflows once you have an (institutional) client base who you know personally. If you target retail clients, you will have to invest in branding and establishing a reputation, as well as spending time building trust with advisors.
What do fund managers need to get started and to maintain the relationships?
For successful market entry, having the distribution network up and running quickly is crucial. You can expect to generate demand from investors within the banks, but if your distribution network is not set up correctly you will not gather assets.
ACOLIN helps asset managers develop new markets for UCITS funds – cost-effectively and quickly. We offer a range of distribution administration services, acting as your Swiss legal representative, providing access to a pre-existing network of distribution agreements and offering sales and marketing consultancy services. Our distribution management services offer access to distributor platforms and our sales support opens the doors to potential clients. ACOLIN will manage the distribution administration for you, while you can focus on managing money and building long term relationships with investors.
What would be the first step for a fund manager looking to set-up distribution in Switzerland?
Get a clear picture of the Swiss market and define a focused market entry strategy. We would certainly love to help. Please contact ACOLIN either in our Zurich or our London office to discuss your distribution strategy.