Swiss-based managers assess potential of emerging investment opportunities

Whether it is fixed income, private or digital assets, or pivoting towards active management, asset managers in Switzerland are sculpting strategies as trends affecting pension funds and other institutional investors unfold.

Private debt and natural capital are emerging as promising opportunities for institutional clients, with the latter offering diversification and an inflation hedge, according to Noel Luchena, director institutional clients in Switzerland at Nuveen.

“We believe there’s an educational opportunity for Swiss institutional clients regarding investing in farmland and timberland,” he added.

Investors are looking for good opportunities to return to markets via actively-managed funds, mandates and strategies primarily in fixed income, but also in equities, according to Martin Rees, country head Switzerland, at BNY Mellon Investment Management.

“Swiss institutional investors, and especially pension funds, are re-starting their searches in the fixed income space, driven by the higher yields of credit and government bonds,” he added.

Menawhile, Swisscanto, the asset manager for the Zürcher Kantonalbank (ZKB), has seen further growth in sustainable investing strategies, and in the field of specialised private market investments, it said in a statement.

Robust private markets appetite

Private market investments has remained robust since Nuveen opened its office in Switzerland in 2022.

“The private market is evolving beyond senior loans to include diverse debt structures, and investors now seek direct, core investments and expertise in specific fields,” Luchena said.

Evergreen structures are re-emerging as a priority for institutional clients for their ability to streamline legal requirements and enhance investment cycles, he added.

Franklin Templeton is also forging its path into private markets as it believes the overall segment will grow.

“I think it’s fair to say that secondaries are still a fairly new asset class for the majority of Swiss investors, and yet the current market environment presents unique opportunities for the asset class,” Christian Leger, head of distribution Switzerland at Franklin Templeton, noted.

Lexington Capital Partners, a Franklin Templeton’s arm specialising in secondary private equity transactions, will play an important role in the Swiss local market for the group, he added.

According to Leger, there are a number of visible trends ongoing in Switzerland, including the consolidation in the pensions market towards larger pools, increasing allocations to privates – which have paused for now – and clearer and stricter investment and reporting guidelines on ESG, especially greenhouse gas emissions.

Fidelity International expects, instead, a higher demand for so-called semi-liquids or liquid alternatives. “It will also be interesting to see how crypto currencies and digital assets in general develop after the crypto winter, said Jürg Rimle, head of Switzerland at the firm.

UBS and Credit Suisse: marlet shake up unlikely

The Swiss asset management association (AMAS) does not expect a market shake up as a result of the takeover of Credit Suisse by UBS last year.

“The takeover offers opportunities for smaller Swiss asset managers, as institutional clients often rely on several other providers for reasons of diversification. The same applies to international providers, for whom the Swiss market remains highly sought-after and attractive,” said Adrian Schatzmann, chief executive officer of AMAS.

The 10 largest asset managers operating in Switzerland have a market share of around 70%, with UBS and Credit Suisse accounting for around 40%, according to the association.

BlackRock has increased its market share by 1.2 percentage points to 8.5% in Q1, thanks also to inflows into passive investment products, it added.

A good number of Swiss pension funds typically use Credit Suisse’s passive investments vehicles for tactical allocations and, above all, for their good fee structures, said Thomas Breitenmoser, head of investment consulting at Complementa.

Pension funds have refrained from changing asset managers because of transaction costs, according to the consultancy.

“Credit Suisse had a very good offering of [asset management] products. With the takeover, UBS has tried to integrate the products, and maybe certain products are no longer requested [by clients[,” CEO Heinz Rothacher added.

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