Asset managers view "monster UBS" very critically
These are difficult times ahead for independent asset managers in Switzerland. The emergence of the new UBS is tricky, the outlook for the financial markets is gloomy, and global debt could reach unprecedented levels. Still, there is one bright spot for the industry, according to the latest AVI Index.
The majority of independent asset managers in Switzerland are critical of the "future" UBS: 24.0 percent of those surveyed believe that the Swiss financial center will lose international importance with only one major Swiss bank. As many as 31.0 percent are of the opinion that without Credit Suisse (CS) there will no longer be sufficient competition in this country (cf. graphic below).
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.
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However, due to the turbulence surrounding CS, independent asset managers were also able to benefit from high inflows of new money, as the survey further reveals. Exactly 52 percent of the survey participants recorded a significant increase in client assets over the past six months.
The main reasons for the change in assets under management were market performance (33 percent) and new money inflows (44 percent). This clearly shows that the independent asset managers benefited from dissatisfied CS clients as well as those who did not want to switch to UBS (cf. graphic below).
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A lot of expedient optimism
Overall, the respondents are surprisingly optimistic about developments on the financial markets, as they were at the end of the year. No fewer than 65 percent of asset managers expect the Swiss Market Index (SMI) to rise. By comparison, the figure for the previous quarter was only 51 percent (cf. graphic below).
However, this assessment is probably also based on a great deal of expedient optimism. After all, the outlook is subdued, as is also Urs Lüscher, founder and partner of Sinvest Finance in Wohlen AG, expresses. "The indebtedness of the world but also the indebtedness of private households can develop into a worldwide problem. In the USA alone, credit card loans have risen to a new high, and at higher debit interest rates. This cocktail could have a massive impact on consumption. We are therefore underweighting equities and focusing primarily on good quality stocks in Switzerland with attractive dividends," says Lüscher.
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Subdued hopes
In three months (cf. graphic below) see the independent asset managers (cf. graphic below) the Swiss Market Index (SMI) at a level of 10,705 (currently: 10,996).
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Independent asset managers are also less euphoric about gold than before. By the end of December 2023, the respondents expect a price of 1,974 dollars per troy ounce (currently: 1,915 dollars) - i.e. further below the 2,000 dollar mark.
They estimate the yield on the 10-year U.S. Treasury at 4.27 percent in three months (currently: 4.54) and the euro-franc exchange rate at 0.9413 (currently: 0.9670). The latter is likely to be related to the economic weakness in Germany.
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In the latest Aquila Focus, Nicolas Peter, Head of Banking & Investments, discusses the continuing rally in US tech stocks and the lack of an interest rate cut in the USA for the time being.
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In 2023, numerous geopolitical risks came to the fore, supplemented by interest rate hikes by central banks in the fight against inflation. The conflict in Ukraine will soon last two years. In addition, the situation in the Middle East has worsened, particularly between Israel and Hamas. An escalation of the conflict to neighboring Arab countries has been prevented so far. Economic weaknesses are also evident in two of Switzerland's key trading partners: China and Germany. These developments are leading to a lack of important impetus from foreign trade. Geopolitical issues will continue to play an important role in the coming year. However, the past has shown that the impact of such events on the global financial markets is often short-lived.
Fewer sustainability investments, but more investments in pharmaceutical companies and the healthcare sector. Artificial intelligence en masse, but shares instead of gold. These are some of the resolutions of independent asset managers in Switzerland for the first quarter of 2024, according to the latest AVI Index.
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