Switzerland’s ‘tighter regulations’, yes that’s a term that looks out of place when put together with Switzerland, have apparently failed to deter investors and hedge funds from increasing their standing in Zurich. The $24 billion Swiss hedge fund industry will be experiencing some heavy inflows this year after going through a dry spell last year. A good ten hedge funds will be opening shop in Switzerland this year, after none showed interest in the country last year.
Finally bending to the harsh criticism on lax regulation and lack of transparency, the Swiss authorities have been revamping their laws to make them compliant with European Union’s regulations. The stricter rules have attracted new investors now, probably under the belief that they will receive more protection under the new laws.
Earlier, there was some speculation that the tighter regulations will scare off investments which is understandable as the country is known for hiding all kinds of shady assets. It would be a test for Swiss investors to prove their worth without the relaxation of tax evasion. The new tax laws have introduced greater scrutiny which has made it harder to commit fraud. Moreover, the new hedge funds will likely give serious competition to the existing stakeholders in the industry which will help in crushing the weaker ones who have relied heavily on lax tax laws.
The new hedge funds are expected to increase the size of Swiss hedge fund industry to $32 billion, raising $8 billion in the process of opening new funds. The Swiss hedge fund industry is small compared to the $415 billion that are managed by the entire continent. Swiss pension fund Swisscanto and insurance company Suva have decided to increase their investments in single hedge funds which is good news for growth in hedge fund industry but bad for the fund of hedge funds, a $175 billion sector in Switzerland. Assets managed by fund of hedge funds have fallen from the high of $275 billion since the financial crisis.
Those who have been interested in opening new funds include Deepak Gulati, ex-JPMorgan Chase trader and James Berger from B1 Capital. James Berger has previously worked at GLG Partners, an affiliate of MAN GROUP PLC (LON:EMG) (PINK:MNGPF).
As some oxygen goes into Switzerland’s sooted banking and economic system, not only does it get less easier for tax evaders to go about their business, but it also gives a chance of transparent investing and banking to trend in a country which has previously had a very grim reputation.
H/T Jonathan Shazar FINalternatives