Report on Swiss private marketing investments
The Chartered Alternative Investment Analyst (CAIA) Association, the professional association of the global alternative investment industry, and Stableton Financial AG (Stableton), the leading European fintech platform for alternative investments, have published the report entitled "Allocation to Private Markets in Switzerland". .
The main objective of the report is to better understand how investment professionals in Switzerland invest private markets ie. Approach and develop private equity, including venture capital, private debt, private infrastructure and private real estate, in the context of their overall portfolio. Swiss-based investment professionals from across the financial services industry were surveyed, from banks and asset managers to family offices and pension funds, to independent asset managers and fintech companies.
The five key findings of the report are:
- Investors seek exposure to private markets investments primarily for performance potential and income diversification. The report reveals that a large number of investors look to private markets as a way to both differentiate portfolios and signal manager and investment quality.
- Access to private market investment, be it to specific opportunities or to managers, is the most commonly cited challenge. The perceived risk of private investment is a commonly cited reason not to invest. Providing due diligence resources, either in-house or through high-quality external providers, is essential to overcoming these challenges.
- Swiss investment professionals are particularly experienced and demanding, holding advanced degrees and numerous job titles. This trait bodes well for the growth of private market investments in Switzerland.
- Restrictions such as minimum investment size and regulations pose formidable barriers to direct investment in private markets. Investment vehicles such as feeder fund structures and structured products are preferred options to gain access for those who cannot or do not want to invest in LP structures.
- Respondents expect to increase allocation to private markets assets over the next 12 months. This applies in particular to banks and asset managers. Although the interest rate cycle has turned, this does not appear to have dampened investor appetite for private markets so far. How a new regime of higher interest rates and increasing volatility in public markets will affect future private market allocations is admittedly difficult to predict. Important future topics relate to technological progress, health and ESG.
Laura Merlini, CAIA, Managing Director EMEA of the CAIA Association, said : “If intuitions are often a guide to truth, then this survey confirms the idea of a very sophisticated investment culture in Switzerland, in which portfolio construction and allocation to alternative investments is changing turning customers and long-term investments. Favored Outcomes.”
“The idea for the survey arose from our desire to provide objective and actionable insights into the Swiss private markets. Thanks to the Swiss chapter of the CAIA Association, we have been fortunate to work with the pre-eminent professional association of the global alternative investment industry. I thank the authors for their exceptional scientific work and Laura Merlini, CAIA, for her unwavering support. May this first and future editions become a focal point for anyone interested in the Swiss aspects of private markets investing,” added Andreas Bezner, CFA, co-founder and CEO of Stableton.
The survey was conducted during a particularly challenging macroeconomic and geopolitical period in April and May 2022. While respondents pay close attention to interest rates, inflation and economic growth, investors seem to believe in the power of private markets investing and protection against inflation. Therefore, given the history of Swiss financial market trendsetters, the report may be particularly relevant in understanding the current reshaping of global markets and providing clarity and insights related to future-ready investment portfolios.