Ski resorts from Verbier to Chamonix are developing financial communities as traders and fund managers swap the London underground for Alpine adventure in the wake of the financial crisis.
“The enclave of traders, money managers and ultra-high net-worth individuals managing their own capital has increased in prominence,” said Alex Hoye, who co-founded The Faction Collective ski equipment and clothing company in Verbier. “They seem to be laying deeper roots rather than just taking a year out of the City in the mountains.”
Verbier, where Richard Branson’s chalet costs 149,700 Swiss francs ($161,436) to rent in Christmas week, is luring traders and bankers after the crisis cost more than 100,000 jobs in the City of London. Eric Everard, whose career in London, New York and Tokyo spanned ABN Amro Groep NV, Goldman Sachs Group Inc. and Morgan Stanley, manages a $250 million precious metals fund for European clients from a piste-side office in Verbier.
“Sound of body, sound of mind,” said Everard, a 53-year-old Dutchman, who set up Aurum Global Trading five years ago. “The business environment here is very friendly. There is really no reason to sit in a big financial center.”
A “phenomenal season” for snow was matched by his fund’s performance, said Everard, who posted a return of $230 an ounce after selling gold short three months ago.
“This is one of the best years ever for the fund as I shorted gold in January and took profits on April 15,” said Everard. Short sellers bet that a commodity or security will fall and later repurchase units at a lower price to make a profit.
Gold slumped 14 percent over April 12 and April 15 fund as economic growth in China slowed, Goldman Sachs recommended investors sell the precious metal and amid speculation the U.S. Federal Reserve will reduce its bond buying program. The metal’s biggest two-day drop since 1983 helped wipe out almost $1 billion of hedge-fund manager John Paulson’s wealth.
Snowfall of 9.6 meters (31.5 feet) was almost 50 percent above the winter average, according to Gianluca Lepori, business director of Televerbier, which operates 400 kilometers (249 miles) of trails across four interconnected Swiss valleys on the border with France and Italy. The ski season ends on April 28.
“Residents haven’t seen snow like this for 30 years,” said Everard, adding that he has more dinner parties in Verbier than he did in London. “It’s mega social.”
While Everard sometimes gets up at 3 a.m. to monitor his portfolio, when skiing conditions are good, he conducts calls from a chairlift with trading counterparties and clients, some of whom own chalets nearby. Clients “seem indifferent” to his choice of base, said Everard, who meets some of them informally in a local wine bar at the end of the day to discuss the market.
“There has never been any questions regarding the location from any existing or new clients,” said Everard, who occasionally leaves Verbier to accompany investors to gold vaults in Zurich. “I guess my CV showing well over 25 years of experience in finance has helped.”
Everard said his fund posted annual returns of more than 30 percent for the three years to 2011, before declining 6 percent in 2012.
Off the slopes, managers swap investing and skiing tips in Verbier’s Fer a Cheval restaurant and mix with the weekend crowds from Geneva’s private banks and London’s hedge funds in the Farinet bar or Farm Club, where a bottle of Cristal champagne costs 700 francs. Weekending investment bankers from London are less visible since the crisis, said entrepreneur Hoye, who divides his time between the U.K. capital and Verbier.
To make the ski resort a viable place to work, you need to bring some “stake money” and a network of financial contacts, said Charles Bromley of Corinthian Financial Management, who left London in 2002 to manage the business from Verbier, a village of almost 3,000 permanent residents.
“Numbers are increasing since the crisis as successful people in the City decide they want to do their own thing and pursue a better lifestyle,” said Bromley, pausing to monitor an iPhone Skype chat with a broker and his investment team during an interview in a cafe opposite the Medran gondola. “Verbier has got a sophisticated international community.”
Bromley, who was previously head of European capital markets at Nikko Securities in London, has hired four people to help manage the business, including three “locals” he trained himself and a fourth who was a former Morgan Stanley researcher. Investments include initial public offerings, pre-IPO stock and debt, said Bromley, declining to disclose how much he manages.
Visitors to Verbier, which has branches of Switzerland’s three largest wealth managers UBS AG, Credit Suisse Group AG and Julius Baer Group Ltd., pay 402 francs for a seven-day ski pass that also gives them access to signature off-piste runs from the top of the 3,330-meter Mont Fort.
Neighboring Chamonix also attracts A-list celebrities -- Kylie Minogue balancing Verbier regulars such as Justin Timberlake and the U.K.’s Prince Harry -- and the French resort, encircled by snow-clad peaks almost three miles high, is also luring its own cadre of financial professionals.
“The real advantage of being based here is avoiding the 10-hour round trip from London to ski at weekends,” Nino Constantini, a Chamonix-based trader who bets on intraday index price movements, said in an interview in Le Vert bar. “You have to keep your eye on the ball during market hours.”
Working from a chalet boasting a view of Mont Blanc, western Europe’s highest mountain, Constantini uses a virtual trading room provided by London-based Amplify Trading.
Constantini makes a profit by keeping fixed costs low and avoiding the high rents of Geneva, one hour away by car. Of course, there are some risks, said Constantini, who slid 15 meters into a crevasse two years ago.
With the U.K.’s financial industry cutting about 140,000 jobs since the start of 2008, according to data compiled by Bloomberg, the appeal of lower-cost Alpine bases may increase.
While compliance can be a burden and a shortage of qualified professionals limits the growth potential, modern trading technology makes managing money from Verbier and Chamonix possible, said Bromley.
“It’s for people who want to take the risk,” he said. “Verbier isn’t going to take the place of a London but it’s much easier to operate from ski resorts now.”