A graduate’s perspective: That’s why investing into Swiss fund structures is worthwhile
Solutions & Funds is committed to helping young people enter the world of employment. We therefore offer students and graduates the opportunity to gain their first professional experience through internships. Anastasia Kosenko has been part of our team since September 2024. She recently obtained a Master's degree in Wealth Management from the University of Geneva. In one of her first weeks as an intern at Solutions & Funds, she has written an article on why it is worth investing in Swiss fund structures. We are happy to publish this article on our blog and would like to thank Anastasia for her thirst for knowledge and her commitment to us.
(Author: Anastasia Kosenko, Solutions & Funds)
With its stable economic and political environment, high levels of innovation, favourable fund structures and investment conditions, Switzerland stands out as an attractive place for foreign fund managers and investors. Recognizing the market’s potential, many investors choose Switzerland to safeguard their capital over long periods of time.
Swiss funds have a special governance structure that offers investors high levels of security, ensuring the safe keeping of their assets. With all the relevant companies defined and verified during the establishment of the fund, investors can trust in the legitimacy and reliability of all the parties involved. Moreover, the entities that are managing the fund constantly oversee each other, ensuring full compliance with regulations and guidelines.
Security is further enhanced by the special provisions governing collective investment schemes in Switzerland. All companies authorized to manage funds must segregate those from all of their other assets. So, in the event that a custodian bank goes bankrupt and is unable to meet its obligations to customers, investors will receive their payouts regardless, as this strict separation protects fund’s assets. (source)
This multilevel regulatory and monitoring framework upholds the high standard for financial products established by the country, distinguishing Switzerland from many other popular fund domiciles, such as those in the EU. There, the quality of services can vary significantly due to differing economic and geopolitical environments among member states. While Luxembourg and Ireland maintain strict compliance and technical standards, other countries take a more lenient approach to fund management. As a result, funds originating specifically from Switzerland remain interesting for people prioritizing security and consistency in their financial ventures.
Another important aspect is that foreign investors can benefit from the privileges present in the local tax regime. In this market, fund structures are fiscally transparent, which means that capital gains are not taxed on their own. Another tax benefit of a Swiss fund is that some entities, such as NGOs and pension funds, are exempt from the withholding tax. However, only collective investment schemes qualify for this exemption while all other instruments are taxed normally. (source)
It is also important to note that in Switzerland, it is possible to establish a fund in multiple languages, which sets it apart from many other domiciles. In addition to English, the predominant language in finance, investors can open a fund in all of Switzerland's official languages: German, French, and Italian. This flexibility allows foreign investors to open a fund and receive communication in the language they are most comfortable with, whereas in other countries, documentation is often limited to a single language.
Overall, we can see that Switzerland's stable economy and favourable investment climate make its funds increasingly appealing to foreign fund managers and investors. With strong governance and regulatory frameworks in place, investors can enjoy a high level of security and transparency. Additionally, the fiscal advantages offered by Swiss funds, combined with the availability of official documentation in multiple languages only enhance their attractiveness. These factors are not just contributing to the appeal of Swiss funds; they are solidifying Switzerland's position as one of the leading financial centres, drawing significant investments from around the globe.