Respected Swiss Asset Management company BCM & Partners SA have been awarded Asset Management Firm of the Year, Switzerland. Their ethos of transparency saw them glide through the recent SNB exchange rate decision.
It was an uncomfortable start to the year for Swiss asset managers following on from the sudden announcement by the Swiss National Bank (SNB) that it would be ending its fixed exchange rate after three years. The currency peg was no longer justified, it claimed, since the Swiss economy had stabilised.
Yet, for many asset managers, the decision – caused by the European Central Bank’s stance to introduce aggressive quantitative easing – came as quite a blow. And the impact was huge. Firstly, it resulted in an inevitable rise in the Swiss franc and, secondly, there were worried discussions concerning how the economy would cope with this unexpected and, some considered dire, policy change.
A cut in interest rates, it was hoped, would help counterbalance the situation. Opinions on the move, however, were divided with some asset managers describing the SNB’s decision as “irresponsible” and advising that it was time to “buy” before prices rose considerably. There was an even gloomier prediction from some that the Swiss economy was heading towards a full-blown recession.
This month though, there is certainly more optimism around, with both the Swiss franc and the euro stabilising at roughly 1.07 and the ZEW-CS indicator – which outlines financial stability – looking better at -37.9bp compared to -73.0bsp in February. Then, of course, there is the improvement in the eurozone itself, thanks, in big part, to those ongoing low oil prices.
Fabio Michienzi is CEO of BCM & Partners SA. The company, part of the C-QUADRAT Group with AUM of approximately USD 6.5 Billion, is the winner of the Asset Management Firm of the Year, Switzerland in the Business Worldwide M&A Awards 2015.
BCM & Partners SA offer both open-ended investment funds managed out of the group’s London/Vienna offices and tailor-managed portfolios. They are proud of their heavy investment in both talented portfolio managers and sophisticated risk management techniques – especially when it comes to the legal, compliance and IT fields.
The company is fully regulated in the UK, Austria and Germany, and provides marketing/distribution services in Switzerland. They describe themselves as “one of Europe’s most skilled and renowned counterparts in the credit markets”. Yet they are not a huge organisation. Indeed, it is their “nimble, skilled and attractive risk/reward approach to investors’ needs” that makes them so successful, according to Michienzi.
His take on SNB’s decision to abolish the fixed exchange rate is philosophical. He understands the bank could not possibly sustain its balance sheet liabilities after the ECB announcement. He confirms that the markets were “taken aback” and predicts it will have a long-lasting effect on both “the ability and capacity for Swiss firms to remain competitive”.
Meanwhile, recent figures from the Research and Markets survey showed that there are currently 4,998 ultra high net worth individuals resident in Switzerland – and that number is set to rise by around 24 per cent in a mere three years’ time. Analysts are quick to point out though that those individuals tend to pick up their income in euros with most of the costs calculated in Swiss francs. At the same time, Switzerland’s geography means it is possible for companies to employ skilled workers from Europe at a lower rate, thus mitigating – to an extent – expensive labour costs.
Then, there is the possibility of acquiring seed capital from a number of sources, such as private banks and insurance companies to name just two. Don’t forget too the quality-of-life index (now renamed the where-to-be-born index), in which Switzerland regularly appears in the top three, if not in the leading position. The country also has that enviable heritage of neutrality and prosperity. Quite simply, it is rara avis for any small country to boast of the level of infrastructure and international population Switzerland has. Today the industries she nurtures are chemicals, food, luxury, financials and tourism.
Michienzi does not lose sleep over the possibility that his company will fall prey to the recent – and ongoing – vagaries of the Swiss economy. Many of the investment funds the company looks after are euro denominated (regulated by the UCITS) and offer daily liquidity. And, considering the company has AUM of around USD 6.5 Billion (although the Geneva branch clearly stands costs in Swiss francs), it is strong as a group – justifying the CEO’s uninterrupted night time shut-eye.
When it comes to the issue of transparency, Michienzi has always insisted on this (alongside a full strategy) for his clients’ portfolios. Of course, Switzerland as a whole has also been heading towards full transparency within the past few years – certainly in terms of revealing who holds a Swiss bank account or operates within the financial markets there.
Michienzi adds: “In my opinion the stereotype of the ‘old Swiss Financial approach’ which provided little yield yet pleased some clients because of its opacity, needs to be overhauled and completely re-designed.
“Several asset managers whose business focused on offshore money can no longer survive thanks to the issue of transparency. Many others simply can’t cope with the new and far stricter compliance requirements and will find it necessary to merge in order to help them absorb ever-increasing industry costs.
“Luckily here at BCM & Partners SA we have broad shoulders thanks to the client base with no offshore accounts and the geographical reach of the C-QUADRAT Group, whom we belong to. C-QUADRAT is listed both in Vienna and in Frankfurt and employs in excess of 80 people.”
This gives Michienzi confidence in looking towards his company’s future. Some financial firms will certainly go under, he predicts. But it won’t be BCM & Partners SA – instead he is convinced the firm will benefit from this irreversible trend.
“By looking at the effects in the finance industry and that of other sectors, it is clear to me that Switzerland will experience an inevitable concentration in the funds sector”, he says.
“Here at BCM & Partners SA we are currently seeking FINMA regulation. The C-QUADRAT Group is already regulated by the FCA in the United Kingdom and the FMA in Austria but we feel it is now imperative to be licensed here in Switzerland. That will allow us to continue in our position as one of the major players in the funds and broader financial industry today and certainly in the future.”