Aaron Grunwald: Switzerland has historically been a really important market for the Luxembourg funds industry. What’s your assessment of the Swiss market today?
Silke Bernard: I think the Swiss market is still a very important one for the Luxembourg fund industry, both on the sponsor side and on the investor side. I’m working for a large number of fund sponsors which are using Luxembourg as the gateway to the world, actually. You can very nicely combine Swiss investors, institutional, but also high net worth, with Luxembourg vehicles and go into Europe and the rest of the world. That works pretty well. What may have shifted a little bit is from the traditional Ucits business to now expanding into alternatives. We have many Swiss actors going into the alternative space, including some of the ex-Cayman fund sponsors now using Luxembourg structures, because they work just as well.
And it’s an onshore jurisdiction?
Yes, so it is better received by some investors. Others just look at the content and say, ‘Okay, that’s pretty much like Cayman, so fine with me.’
Have there been any important regulatory changes?
Well, I think the point that is creating a little bit of a headache is the new marketing rules in Switzerland. There have been changes in the Swiss legislation and there’s also a template distribution agreement, and so on. So that adds a little bit of workload, which is actually not a bad thing, because we are collaborating more closely with our Swiss colleagues.
Have you seen a big shift in fund players? Or is it the same companies that have always been interested in Luxembourg that are still interested?
It’s the same players, adding [new funds]. What is changing in line with international development is a lot of interest in retailisation or democratisation [of access to private market funds].
Is retailisation bringing a lot of new business to Luxembourg?
Yeah, definitely. There’s a lot of appetite [for European Long-Term Investment Funds, Eltifs]. I have my entire team working on it. We have something like 15 or so Eltifs in preparation, which is massive, if you see that there are only something like 80 or so approved [in the EU]. That is just a massive number.
Is ESG a roadblock for Swiss fund firms?
ESG is rather seen as an opportunity for many Swiss players because they’re by nature very ESG friendly, very close to nature. So ESG is not a problem, it’s rather an opportunity. And many Swiss players really like being in that field. So, no.
What are the most important topics for this year’s Alfi roadshow in Switzerland?
I think the two topics that are really important right now are retailisation and ESG. Those are the two main things that everybody’s talking about, and everybody needs to talk about, because that is where real opportunities lie. And also some threats.
By threats, you mean people not moving fast enough?
By threats, I mean, to get it wrong, to do greenwashing without attempting to do so or to disclose what you’re doing in words that can be easily misunderstood. And suddenly you end up with some investor complaint or consumer protection organisations saying you have sold something different from what you’re doing. [Even] if you were [acting] in good faith, it was just misunderstood. That’s very easy and a big threat.
This article first appeared in the November 2022 issue of Delano magazine.