Back to overview

Privat Debt: a first in Switzerland

Alternative investments have seen strong growth in Switzerland in recent years. The increasing demand for private label funds with illiquid investments shows that many institutional investors and asset managers are turning away from large collective vehicles where they have no say. Customised private label fund solutions with investment strategies such as private debt are moving into focus.

(Author: Thomas Zimmermann, Head Sales & Marketing at Solutions & Funds)

For a long time, asset managers and pension funds were only invested in large collective vehicles predominantly from international Anglo-Saxon providers and mostly had to subordinate their own views in terms of risk or strategy. Many institutional investors want to have a greater say and have also acquired a taste for launching their own funds in Switzerland. With offers structured specifically for them, the investment strategy, risk, and remuneration policy can be freely designed according to their own preferences.

Investors who were previously interested in illiquid investment fund strategies have turned to foreign offshore fund domiciles. In the meantime, however, word has also got around in the domestic asset management and pension market that Swiss fund solutions offer several advantages, such as time-to-market and tax benefits.

S&F launches private debt in Switzerland

One of these investment strategies for which foreign fund domiciles were previously used is Private Debt. With the two successfully launched Real Estate Private Debt funds, S&F has taken on a pioneering role as a fund management company. Solutions & Funds introduced this asset class in Switzerland for the first time. The success of these tailor-made fund solutions has shown that private debt strategies can also be easily structured in Swiss investment funds. The open-ended investment fund type in particular has proven to be beneficial - both for investors and fund managers.

However, further development potential can be identified - for example in the structuring of corporate loan funds or whole loan vehicles. The latter combine senior and junior loan fund strategies and could thus offer borrowers significant added value compared to today's conglomerate financing models.

L-QIF: Further boost for alternative funds with Swiss domicile

The existing potential in the area of Private Debt could already be utilised in the coming years. This is because the new Collective Investment Schemes Act (CISA), which is expected to come into force in spring 2024, will bring a new type of fund product to the market in the form of the Limited Qualified Investor Fund (L-QIF). This will further increase the attractiveness and innovative capacity of Switzerland as a fund market.

In future, there will be even fewer reasons to favour foreign fund domiciles. The L-QIF is not subject to approval or authorisation by FINMA and is launched and monitored by a Swiss fund management company. The elimination of the fund approval requirement promises a significant time saving in the legal establishment of an investment fund.