Global investment management is a growing area of business for the financial sector, and this is also true in Switzerland. In recent years, investment management, i.e. asset management for institutional and private customers, has established itself as a mainstay and hallmark of Swiss finance. It adds a great deal of value for both the financial sector and the real economy by allocating capital in line with needs and ensuring efficient markets and professional management of institutional and non-institutional assets.
Increase in assets under management to CHF 5 tn
The term “investment management” covers the management of collective investment schemes as well as discretionary and advisory mandates for institutional and non-institutional customers. The SBA’s 2018 study3 sheds light on this area of business across a broad front and reveals the strength of the combined institutional and non-institutional asset management industry in Switzerland. The broad definition also makes it possible to highlight the symbiotic relationship between the different fields and their constructive interplay with regard to innovation and infrastructure thanks to a large shared base of investable assets. A significant portion of the assets under management in Switzerland are managed for contracting partners outside the country. This underscores the global competitiveness of Swiss investment management. The best prospects for Swiss investment management probably lie abroad, since the domestic market is already covered to a great extent.
Investment management outperforms wealth management in terms of assets under management
In 2021, investments totalling CHF 5 tn were managed in Switzerland. This equates to more than six times national GDP. Assets under management in investment management have exceeded those in wealth management since 2019. They grew by 16.7% year-on-year due to a combination of market gains. There were no significant changes in the overall composition of portfolios. Collective investment schemes under foreign law and advisory mandates showed the strongest growth. In terms of overall numbers, Swiss-law collective investment schemes and discretionary mandates for institutional investors continue to dominate.
Sustainability as a key success factor
Investment management is subject to trends that reflect investors’ needs as well as economic and social changes. Alongside traditional asset classes such as equities and bonds, customers’ needs are increasingly shifting towards alternative investments. These entail greater innovation and require specialist knowledge and infrastructure as well as political stability and favourable framework conditions. Swiss investment management began to play an active role in this trend at an early stage. An increasing number of both institutional and private investors are focusing ever more strongly on the sustainability impact of their investments. Industry insiders report, for example, that pension funds are no longer considering investment proposals that do not take account of sustainability issues. The Swiss financial centre is a pioneer in sustainable finance and on course to become a premier international hub in this field. The term “sustainable finance” refers to financial services that incorporate ESG (environmental, social and governance) criteria into their business or investment decisions for the benefit of clients and society as a whole. Given the right political framework, various financial sector initiatives will be able to help Switzerland become a leading hub for sustainable finance. The volume of assets in Swiss investment management that are managed via sustainable approaches has risen sharply in recent years. It stood at CHF 1,972.7 bn4 at the end of 2021, up 30% year-on-year. The lion’s share of this is attributable to sustainable investment funds, followed by owner-managed investments.