Swiss investment professionals optimistic about private market investments, despite challenges, the new report by CAIA Association and Stableton reveals
Jun 28, 2022
Zürich, Geneva and Amherst, 28 June 2022: Chartered Alternative Investment Analyst (CAIA) Association, the professional body for the global alternative investment industry, and Stableton Financial AG (Stableton), the leading European Fintech platform for Alternative Investments, today published their inaugural report called “Allocation to Private Markets in Switzerland”.
The report’s main objective is to better understand how investment professionals in Switzerland approach and intend to develop private market investments (i.e. private equity, including venture capital, private debt, private infrastructure, and private real estate) within the context of their overall portfolios. Switzerland-based investment professionals across the entire financial services industry, ranging from banks and asset managers, family offices, pension funds to independent wealth managers and fintech companies, were surveyed.
The survey was conducted during a particularly challenging macro-economic and geopolitical period in April and May 2022. While respondents are paying close attention to interest rates, inflation and economic growth, it seems that investors believe in the ability of private market investments to provide some inflation protection. In light of Switzerland’s history of financial market trend setting, the report may therefore be particularly relevant to understanding the current re-shaping of global markets and provide clarity and insights with respect to future-ready investment portfolios.
The report’s five key take-a-ways are:
- Investors seek exposure to private market investments mainly for performance potential and return diversification. The report unveils that a high number of investors view private markets as a way to both differentiate the portfolio and to signal manager and investment quality.
- Access to private market investments, be it to specific opportunities or to managers, is the most frequently mentioned challenge. Perceived risk of private investments is a frequently cited reason not to invest. Devoting resources to due diligence, either internally or through quality external providers, is essential in overcoming these challenges.
- Swiss investment professionals are particularly experienced and sophisticated, holding advanced degrees and numerous professional designations. This feature bodes well for the growth of private market investments in Switzerland.
- Constraints such as minimum investment size and regulations provide formidable barriers to direct investment in private markets. Investment vehicles such as feeder fund structures and structured products are favored options to gain access for those unable or unwilling to invest into LP-type structures.
- Survey participants expect to increase allocation to private market investments over the next 12 months. This is especially true for banks and wealth managers. Although the interest rate cycle has turned, this does not seem to deter investors’ appetite for private markets so far. How a new regime of higher interest rates and rising volatility in the public markets will impact future allocations to private markets is admittedly difficult to assess. Important future themes relate to technological advancements, health, and ESG.
Laura Merlini, CAIA, Managing Director EMEA at CAIA Association said: “If intuitions are often a guide to truth, then this survey corroborates the idea of a very sophisticated investment culture in Switzerland where portfolio construction and allocation to alternatives pivot around clients and long-term beneficiary outcomes.”
“The idea for the survey was born out of our quest for delivering objective and actionable insights into Swiss private markets. Thanks to CAIA Association’s Switzerland Chapter, we were fortunate to partner with the preeminent professional body for the global alternative investment industry. I thank the authors for their exceptional academic work and Laura Merlini, CAIA, for her unrelenting support. May this inaugural edition, and future editions, become a go-to for everyone interested in the Swiss aspects of private markets investing”, added Andreas Bezner, CFA, co-founder, and CEO of Stableton.
About the CAIA Association
The CAIA Association is a global professional body dedicated to creating greater alignment, transparency, and knowledge for all investors, with a specific emphasis on alternative investments. A Member-driven organization representing more than 12,000 professionals in more than 100 countries, CAIA Association advocates for the highest ethical standards. The organization provides unbiased insight on a broad range of investment strategies and industry issues, key among them being efforts to bring greater diversification to portfolio construction decisions to achieve better long-term investor outcomes. To learn more about the CAIA Association and how to become part of the organization’s mission, please visit https://caia.org/.
About Stableton Financial AG
Stableton’s Fintech Alternative Investments platform strives to become the world’s leading market network for qualified and institutional investors seeking exposure to liquid Alternative Investments, private equity, including venture capital, private debt, and real assets. Our platform investors benefit from easy access, unique investment opportunities, performance, and measurable impact in absolute return strategies and Alternative Investment strategies from best-in-class investment providers. In addition, alternative Investment providers benefit from a scalable, fully digital, and data-driven infrastructure that enables effective and efficient lead generation and distribution. For more information, please visit www.stableton.com.
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Stableton Financial AG
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