Switzerland Faces Alpine Exodus In Face Of New Hedge Rules

Dec 12 2012 | 10:20am ET

Almost half of Switzerland's hedge funds are mulling a move to Liechtenstein to avoid newly-adopted Swiss hedge fund regulations, a new survey shows.

Switzerland, long favored as a light-touch regulatory haven, has approved new rules that mirror tougher regulations adopted by the European Union. But while the EU has pledged to grant access to its markets to hedge funds from any country whose regulations pass its muster, those third-country funds might have to wait until 2015—and possibly longer—to get a so-called "passport."

Switzerland is not an EU member, nor a member of the European Economic Area. But Liechtenstein, whose 61 square miles are wedged between Switzerland and Austria, is an EEA member, and hedge funds based their will not have to wait for a passport. About 47% of Swiss fund managers are considering a move to the tiny principality, long a popular tax haven, according to a PricewaterhouseCoopers survey.

"Until now, Switzerland offered one of the most lenient private investment regimes in Europe, if not the world," PwC's Günther Dobrauz told Bloomberg News. "This is about to change."

It is unclear how many hedge funds will actually make good on the threat to move. Almost three-quarters of the 92 firms surveyed said that Switzerland is their home base due to proximity to friends and family. And while Liechstenstein is only about 50 miles or less from hedge fund centers like Zürich, Zug and Pfäffikon, it is on the opposite side of the country from Geneva, a roughly four-hour drive.


In Depth

'Smart Beta' Funds In Regulators' Sights, Hedgies May Be Next

Mar 26 2015 | 11:11am ET

Funds that mimic strategies used by active managers for a fraction of the cost could...

Lifestyle

Study: Both Marriage and Divorce Lead to Negative Hedge Fund Performance

Mar 25 2015 | 6:51pm ET

Trouble at home leads to trouble in the market for fund managers, according to researchers...

Guest Contributor

Concerned About Your HFT Exposure? Hedge It!

Mar 26 2015 | 1:06pm ET

High-frequency trading has been a persistent storyline for several years. The trading...

 

Sponsored Content

    Mar 9 2015 | 6:35am ET

    Kelly RodriquesKelly RodriquesAs more investors look to diversify, many are beginning to use retirement funds to invest in alternative assets such as private equity and real estate. Kelly Rodriques, CEO & President of PENSCO Trust Company, explains how companies can connect with those looking to use their retirement accounts in a different way. Read more…

Editor's Note