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Independent asset managers in Switzerland are in good shape, but they agree that their numbers will decrease significantly over the next few years, as a recent survey shows. They do not yet have much to do with artificial intelligence. However, those who do use it are optimizing their investment strategy and obtaining better research material.
More than two thirds of independent asset managers in Switzerland expect a new wave of consolidation in their industry due to falling interest rates and the resulting narrowing of margins. At the same time, 67 percent of those surveyed believe that a third of firms will disappear in the next few years.
A good 5 percent of survey participants even assume that half of the independent asset managers in this country will disappear (cf. graphic below). The various estimates of the current number of independent asset managers in this country vary between 1,500 and 2,000.
(Click on graphic to enlarge)
These assessments are based on the latest Aquila Asset Manager Index (AVI), which the Swiss Aquila Group every three months in cooperation with finews.ch is published. The index summarizes various forecasts and assessments of independent asset managers in Switzerland. In each case, 150 firms participate in the latest survey.
The survey also shows that there has been a change of opinion in the political perception of Swiss asset managers. 67 percent of those surveyed now believe that Kamala Harris the US presidential election against Donald Trump will win. Previously, when Joe Biden in the race, the dominant belief was that Trump would win. This has now clearly changed (cf. graphic below).
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Another very interesting finding in the latest AVI Index is that independent asset managers do not think much of artificial intelligence (AI) in their job. Specifically: 42 percent of survey participants stated that they do not deal with it professionally. Nevertheless, 26% said that they could make their compliance and administration more efficient thanks to AI and the corresponding tools.
Exactly 20 percent want to use AI to provide their clients with better research material, and 10 percent of independent asset managers optimize their investment strategy with AI models.
(Click on graphic to enlarge)
Independent asset managers have become somewhat more cautious in their assessment of the Swiss Market Index's (SMI) performance over the next twelve months. Only 61 percent (after 67 percent three months ago) still expect prices to continue to rise.
The Euro Stoxx 50 and the US S&P 500 are still dominated by confidence. In Europe, half of those surveyed expect prices to continue to rise (compared to 42% three months ago), and in the USA the figure is as high as 65% (compared to 58% three months ago).
(Click on graphic to enlarge)
"The fourth quarter is historically one of the strongest phases on the markets, and the probability of a so-called melt-up at the end of the year has increased further as a result of current developments," says Bruno SchnellerManaging Partner at Erlen Capital Management in Zurich.
"Interest rate cuts by the US Federal Reserve (Fed) typically lead to market gains, especially when there is no threat of recession. Companies benefit from more favorable financing conditions and we expect that, in addition to the tech giants, long-neglected companies will also gain momentum in the coming months," Schneller continues.
Boom in Chinese equities
"The recent interest rate cut by the Swiss National Bank (SNB) was rather moderate at 0.25 percent. The current market situation is still dominated by the further development of interest rates and inflation figures," says Manuela Rupf-DiethelmManaging Partner at Alpique Swiss Wealth Partners in Zurich.
"The Chinese government's fiscal measures triggered a boom in Chinese equities last week, creating a positive mood. The European and US markets also benefited from this," continued Rupf-Diethelm. The DAX reached new highs.
React flexibly to interest rate changes
However, the financial expert also emphasizes: "We are remaining rather cautious for the coming months in order to be able to react flexibly to changes in interest rates. We are still positive about gold, and on the investment side we prefer medium-term bonds of good quality and value good dividend portfolios."
In their asset allocation, independent asset managers still overweight equities on average and hold a relatively high share of 8.7 percent in alternative investments; gold and precious metals make up 7 percent of the portfolio, while liquidity accounts for 9.8 percent and bonds for 27.8 percent (cf. graphic below).
(Click on graphic to enlarge)
Disclaimer: Produced by Investment Center Aquila Ltd.
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