Enacted two years ago to enhance the competitiveness of the
Swiss funds industry, the Swiss Collective Investment Schemes Act
(CISA) has been responsible for a large rise in the number of
qualified investor funds, according to the Swiss Funds Association
(SFA). Qualified Investor Funds, which are restricted to
individuals with at least CHF2 million under management, are mainly
used by hedge funds. According to SFA data, between December 2006
and December 2008, the number of qualified investor funds rose by
40%, to 520.
CISA also introduced new legal structures aimed at attracting hedge
funds, including investment funds with variable capital (SICAV) and
limited partnerships (LP). According to the SFA, 16 SICAVs have
been launched since the legislation, and five LPs.
Following implementation of CISA, the Swiss financial services
sector has launched a number of initiatives with the aim of
boosting Switzerland's reputation as a global financial
services centre. Last September, a joint task force led by the
Swiss Financial Centre Dialogue Steering Committee approved a
series of measures aimed at attracting hedge funds including
clarification of the tax regime for hedge funds and simplification
of the authorisation process required by the Swiss Regulator (Swiss
Federal Banking Commission) for hedge fund managers. A number of
Swiss cantons have been aggressively targeting hedge fund managers
since the change in the UK non-domicile tax regime last year, which
made London a less attractive location for non-UK managers.
Switzerland has long been a leader in the funds of hedge funds
sector, with five of the seven largest funds of hedge funds
domiciled in the country and a worldwide market share of 31%.
However, until recently it has failed to attract significant
numbers of single hedge funds.
According to the SFA, a majority of Swiss hedge funds posted
negative performance in 2008 - the first year with a net outflow of
assets since 1998.
For more information on CISA and the Financial Services Masterplan,
UCITS may invest in financial derivative instruments for investment purposes subject to a variety of conditions as outlined below relating to the nature of the exposures taken, the leverage generated through such positions, the process employed by the UCITS to manage the risks arising from derivatives investment as well as rules relating to OTC counterparty exposure and to the valuation of derivatives positions.
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