Hedge Funds Receive Mixed Response from Swiss-Based Investors

by Graeme Terry

  • 05 Mar 2012
  • HF

There are currently 215 institutional investors based in Switzerland that are investing, or actively considering investing, in hedge funds. The main investor groups in this region are funds of hedge funds (32%), private sector pension funds (22%), public pension funds (13%), family offices (13%) and asset managers (8%). Recent evidence suggests that these investors currently have mixed feelings about hedge funds, with some investors reducing exposure to the asset class due to performance concerns, while others are actively seeking new investments. Hedge fund managers will need to improve performance if they want to continue receiving substantial capital from investors in this region.

The average allocation to hedge funds amongst Swiss investors currently stands at 6.6%, which is below the current mean target allocation amongst this investor group 8.2%. This suggests that many of these investors have room to increase their hedge fund allocations. Despite this, however, a number of Swiss pension plans are aiming to reduce their exposure to the asset class due to concerns over performance. Both Valitas Sammelstiftung and Pensionskasse Bühler have dramatically reduced their exposure to hedge funds over the past year and CAP recently announced that it is considering exiting the asset class completely in order to focus on more socially responsible investments. The majority of Swiss pension funds that invest in hedge funds prefer to do so via funds of hedge funds, as these vehicles provide additional diversification benefits and many such pension funds lack the resources to effectively manage a single-manager hedge fund portfolio.

Funds of hedge funds in Switzerland are continuing to raise capital and BrunnerInvest and Reyl Asset Management are two examples of managers that expect to be active in sourcing new hedge fund managers over the course of 2012. Swiss asset manager Huser Invest is also looking to increase its exposure to the asset class over the coming year and will consider allocations to both single-manager hedge funds and funds of hedge funds.

Long/short equity is by far the most popular strategy amongst Swiss-based investors with 58% of investors in this region indicating this as a strategy preference. Other popular strategies include macro (38% of investors indicate this as a preference), multi-strategy (38%) and event driven (34%).

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