Swiss Taxes Lure New Single Hedge Fund Managers as Industry `Reinvented'

Swiss hedge funds have “reinvented themselves” this year as the country attracts new managers by offering lower tax rates than rival financial centers, according to a Zurich University study.

There are 125 single-manager hedge funds in Switzerland managing $14 billion across 71 firms, the report published today by the university’s Centre for Alternative Investments and Risk Management showed. While overall numbers were stable, one-third of the funds that operated two years ago have either gone out of business or now offer other asset management services, it said.

Swiss managers rank third in Europe, with 4 percent of the market, behind London’s 75 percent share and Sweden with 5 percent. Brevan Howard Asset Management LLP, Europe’s biggest hedge fund, and third-ranked BlueCrest Capital Management Ltd. have both opened offices in Geneva this year.

“Heavy competition between cantons has helped to keep tax rates low,” making Switzerland more appealing, Regina Anhorn, one of the study’s authors, said in a presentation in Zurich. “We have seen famous names move part of their institution to Switzerland. We may see many more to come.”

There are signs that fees charged by Swiss hedge funds fell over the past two years, from a typical 2 percent management fee and a 20 percent share of performance, according to the study. A 1 percent management fee is “increasing in popularity” together with a performance fee of 10 percent, it said.

‘New People’

“They have reinvented themselves with new people, new ideas, new names,” said Anhorn, commenting on changes to the Swiss hedge fund industry.

Hedge funds posted their biggest gain in four months in July as a rally in equity, commodity and bond markets lifted returns, according to Eurekahedge Pte. That index, which tracks more than 2,000 funds worldwide, rose 1.42 percent, the most since March, giving a gain of 1.17 percent this year.

The Zurich study was carried out from March to July with 40 percent of managers responding to the survey. Below is a table of the top 10 Swiss single-manager hedge funds with assets under management in millions of dollars.

Firm                                    Assets under
                                        Management
                                        ($ million)
Jabre Capital Partners                  4,313
Credit Suisse Group                     1,700
Amplitude Capital AG                      806
Pictet Asset Management                   667
Conservative Concept AG                   666
Progressive Capital Partners Ltd.         553
Arkos Capital                             550
Premium Currencies Advisors AG            545
Wegelin & Co.                             538
Tiresias Capital                          537

Source: Data compiles by Centre for Alternative Investments and
Risk Management.

To contact the reporter on this story: Warren Giles in Geneva at wgiles@bloomberg.net

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