The brains behind a Zurich-based startup claim that the index fund boom has peaked and are working on an alternative, together with one of Switzerland’s finest universities and Credit Suisse.
«We have reached the peak in growth in indexing,» said Christian Gast (pictured below). He should know, after all Gast is known as Mister ETF in the industry. He sold exchange traded funds to Swiss investors for 18 years, first at UBS and later for Blackrock.
In November 2018, Gast assumed a new role. He was given the job as CEO in a venture to develop Systematic Investment Management (Simag), a spinoff from ETH Zurich. Simag is looking for an alternative to the index funds, based on a quantitative approach.
With a Little Help From Credit Suisse
The startup, which has its offices at Loewenstrasse, within walking distance to Zurich’s prestige Bahnhofstrasse, has the support of Credit Suisse. The bank’s fund division helped the startup reach out to the world of global investors and acted as sponsor.
The university provided the knowledge of one of its finest brains, Didier Sornette (below), a physics professor who has been doing research on financial markets for decades and was widely acclaimed for his financial bubble experiment.
Very, Very Complicated
Simag also has access to ETH’s super computer, which provided the basis for the product. The quantative strategy was built on knowledge taken from physics, autonomous systems, deep learning and behavioral finance.
Simag’s founders have spent three years developing the system and now, the spinoff aims to build the bridge from the theoretical world into finance, to convince investors to buy its funds. And that’s where Gast comes in – and he has found out that the task will be steep. «It is far more complicated that it sounds,» he told a group of journalists a few days ago.
Saturated Markets Eager for Alternative
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