At the end of 2021, Swiss fund houses managed around 3.3 trillion Swiss francs ($3.4 trillion), an increase of 18 percent over the previous year. Inflows of new money accounted for 3.9 percentage points, or 108 billion Swiss francs, of that growth while investment performance contributed 14.4 percentage points, amounting to just over 400 billion francs a survey prepared by the Lucerne University of Applied Sciences and Arts (HSLU) and the Asset Management Association Switzerland (AMAS), showed.

Uncertain Outlook

The success wasn't limited to just last year, as seen by assets under management (AuM) growing at a compound annual growth rate (CAGR) of 10.8 percent from 2016 to 2021. Of that, net new money accounted for 3.0 percent. The average profit margin is estimated to be 15 basis points of assets under management. Total industry net revenues are estimated at 16.5 billion Swiss francs and total profits at approximately 4.95 billion Swiss francs.

This year, however, that admirable performance is under threat from multiple headwinds. «Significant geopolitical tensions, high inflation, and volatile financial markets make the market outlook for the industry appear more uncertain in the near future,» said Juerg Fausch, an  HSLU economist and lead author of the study.

Foreign Demand

The Swiss asset management industry, which also attracts a great deal of money from abroad, promotes economic growth and contributes to a sustainable pension system, according to the study. Thanks to its solid domestic talent pool and high attractiveness to foreign professionals, Switzerland is a talent leader in talent and competes on an equal footing with the financial centers of London and Frankfurt. 

However, regulation is seen as a weakness because Switzerland, as a non-EU country, is subject to regulatory disadvantages, which affects its ranking in the area of sustainability. To overcome this, Switzerland needs to focus intensively on sustainability and innovation in FinTech and digital assets sectors, according to the study, because these are the most important growth markets and the competitive field in which the future of the asset management industry will be decided.

Private Banking

Switzerland is widely known for its private banking industry which is also larger than the fund sector in terms of volume of assets under management, but the effectiveness of asset management is higher. Per full-time equivalent employee (FTE), asset management achieves an AuM of 271 million Swiss francs per FTE, while the figure for private banking is 94 million francs.

Switzerland's role as a global asset management hub is expanding. Since 2017, the share of assets managed on behalf of foreign contract clients has risen to 33 percent from 25 percent previously, according to the report.

«Asset management stimulates long-term economic growth by providing the investment channel between financial markets and the real economy. It also contributes to the sustainability of the pension system by generating valuable returns from the savings of millions of people in Switzerland and abroad,» says Fausch.

Sustainable Finance

«The Swiss asset management hub demonstrates its high competitiveness through its broad-based strategy to become a leading hub for sustainable finance,» says AMAS CEO Adrian Schatzmann. 

Sustainable finance is seen as an important sector for the future, with almost 90 percent of the asset managers surveyed classifying sustainable investments as fairly or very important in their investment management strategies. Around 40 percent of firms say they have fully integrated ESG criteria into their investment process.