With the takeover of Credit Suisse, UBS is expanding its dominant position in the Swiss fund business. But not all money is flowing to UBS, and a focus on security dominates among investors.

After a mixed first half of 2023, UBS is preparing for a quantum leap in the fund business. It will be able to significantly expand its market share following its acquisition of Credit Suisse, figures from the Asset Management Association (AMAS) and Swiss Fund Data show.

UBS already has a market share of 25.1 percent followed by Credit Suisse with 13.1 percent. Swisscanto, the fund division of Zuercher Kantonalbank (ZKB) has 9.7 percent.

Winners and Losers

The statistics show funds flowing from Credit Suisse to other asset managers in recent months. Compared to the end of 2022, Lombard Odier, Blackrock, Pictet, and Swisscanto, in particular, were able to expand their market share. Life insurer Swiss Life and JPMorgan saw their positions stagnate. Vontobel even suffered a significant decline, with its market share falling to 2.4 percent compared with 3 percent at the end of 2022, as finews.com reported.

Overall, the Swiss fund market recovered somewhat in the first half of 2023, after declining in 2022 due to tighter central bank monetary policy, inflation, and the war in Ukraine. At midyear, fund holdings rose to 1.378 trillion Swiss francs, up nearly 54 billion francs from the end of last year. The recovery was driven primarily by performance gains, AMAS writes.

They contributed 40.3 billion francs, or 3 percent, to the volume increase, while net new money inflows amounted to 13.7 billion francs or 1 percent.

Safe-Haven Mindset Dominates

Development by asset class shows a mixed picture, or rather a great reluctance to invest. Not surprisingly, the largest inflows were recorded by money market funds due to rising interest rates, followed by equity and bond vehicles. All other asset classes suffered declines, most notably investment strategy funds, commodity funds, and alternative investment vehicles. This reveals a high level of risk aversion which is likely to continue in the second half of the year given ongoing trends.

«Given the persistence of inflation and the fears of recession that have arisen, investor caution is understandable,» said Adrian Schatzmann, CEO of AMAS. «The inflows into money market funds are a result of the turnaround in interest rates and indicate that a safety mindset continues to dominate in the market.»