The Mirabaud partner talks of his faith in active management and the private bank’s bicentenary.
Lionel Aeschlimann’s enthusiasm for contemporary art almost rivals his devotion to finance. Aeschlimann is head of the CHF6.6 billion ($6.54 billion) asset management arm of Mirabaud, the Swiss private bank that celebrates its 200th anniversary this year.
To mark the bicentenary, the bank has provided free entry to the Museum of Modern and Contemporary Art in Genevaexternal link for the whole of 2019. Mirabaud itself owns an extensive modern art collection including works by Bruce Nauman, Christian Marclay and Marina Abramovic, along with newer artists such as Omar Ba and Antoine Roegiers.
“Contemporary art obliges us to open our eyes and to see things differently. It provokes another way to look at the world we inhabit. You should go,” says Mr Aeschlimann.
Founded in 1819, Mirabaud has remained a family-owned business for seven generations, a rarity. Few family businesses survive beyond a third generation.
“We can congratulate ourselves about the past 200 years but we have to look forward,” says Aeschlimann. This year, Mirabaud will open offices in Brazil, the UAE and Uruguay.
"The clients's money is sacrosanct"
When Aeschlimann was recruited in 2010, the only instruction he was given was “to communicate Mirabaud to the next generation. That was it,” he says with laughter.
Aeschlimann is one of the six managing partners who own Mirabaud and oversee CHF32.3 billion in assets, a figure that includes its wealth management business.
“The equity of the group is our money. It means constraints. We grow slowly and organically. It brings discipline, obliges us to be focused and to have a long-term view. Having time in asset management is essential.”
Unprompted, he launches into a defense of Mirabaud’s partnership model, insisting that smaller firms do not create significant risks to the stability of financial markets.
“The financial crisis was caused by the systemic institutions, the large banks and insurers. Mirabaud is in a completely different world. We are not trying to maximise short-term profits. Clients will work with us for 10, 20 or 30 years. Being smaller does not mean being higher risk,” he insists.
As evidence, he notes that most of the group’s total consolidated assets of CHF4.1 billion are customer deposits held at the Swiss central bank or invested in short-term government bonds. Some of this money earns negative interest rates, a situation that Aeschlimann describes as a “financial nonsense”.
“But it is a golden rule that we don’t play with clients’ cash. If we ran a proprietary business, we could have multiplied our profits five times or more. But the clients’ money is sacrosanct,” says the father of two adult sons.
Keeping faith in active management
Mirabaud’s net profits rose 47% last year to CHF59.6 million on revenues of CHF342 million.
The asset management unit was established in 2012 after Mirabaud gained experience running unconstrained high-conviction UK mandates for institutional clients. It now offers 12 main equity and bond strategies that are also available as Ucits funds which follow this same high-alpha approach.
In Aeschlimann’s view, the rising disenchantment among investors with active management is a mistake.
“It can take years for an active management strategy to work, which is why people have lost faith. We have not. To participate in capital allocation through active management is part of being a responsible business.”
He also questions the wisdom of the shift into passive index-tracking funds, particularly by large pension funds.
“To focus entirely on cost is wrong. Do investors really understand what is in an index? Index investing has a bias towards the biggest companies but are those always the best?” he asks.
All of Mirabaud’s portfolio managers are required to invest in their own funds to promote alignment with clients. “That way no one can hide. I am invested in all the funds and so are my partners,” says Aeschlimann.
Finding suitable new portfolio managers requires time-consuming searches but Aeschlimann recalls one notable success. “We found a young, talented manager in New York in the 1970s and provided him with seed finance. It was George Soros. We still have a special relationship.”
Mirabaud was a pioneer of hedge funds in the 1970s. It extended its push into alternatives last year by setting up its first private equity fund. The €150 million (CHF170 million) fund is focused on "enterprises du patrimoine vivant" — living heritage companies — which produce luxury goods and are often family-run. The fund resulted from a meeting between Aeschlimann and Renaud Dutreil, a French former industry minister who cut taxes on intergenerational transfers of family businesses. This initiative saved businesses that would have otherwise gone to the wall and Dutreil’s involvement has helped open doors for Mirabaud.
“The idea is to bring focus, to bring fresh management, marketing and distribution skills to these luxury lifestyle businesses that have a unique history,” says Aeschlimann.
Four deals have already been done on multiples of less than six times earnings, well below the valuations attached to most private equity transactions.
Mirabaud also aims to raise a €500 million real estate fund that will invest in commercial and residential property as part of the Grand Paris Project to improve the French capital.
On Brexit and freedom
Most of Mirabaud’s portfolio managers are located in London and there are no plans to move any capabilities outside the UK as a result of Brexit.
Aeschlimann sees Brexit as a “big mistake”. “We have a bottom-up political construction aimed at securing peace in Europe for the first time in 3,000 years. That is the main purpose of the EU. It will be a big loss if the UK leaves,” says the 52-year-old, who describes himself during the interview as a left-wing liberal.
“I believe in freedom. Freedom for entrepreneurs and companies to create wealth. But freedom goes along with responsibility, with inclusion and ensuring that even the most modest citizens in society have a decent quality of life.”
The interview in Mirabaud’s London office has run well past its allotted hour but as we pass through reception, Aeschlimann chooses to pause in front of a riot of swirling colours, an abstract work painted by Geneva-born Mathieu Dafflon.
“Art is one of the last places where you can find freedom. Artists are often ahead of us. It is healthy for us to question our convictions and to be humble,” he says.
Born: 1966 in Bienne, Switzerland
Education: 1992 Bern University, law degree; 1993 University of Seville, postgraduate diploma in European Law; 1994 College of Europe, Bruges, masters in law
Career: 1994 Brunschwig Wittmer (Swiss law firm); 2000 Partner and head of the banking and finance group of renamed Schellenberg Wittmer; 2010 joined Mirabaud; 2011 Managing partner, Mirabaud; 2012 Head of Mirabaud asset management division
Established in 1819
Assets: CHF32.3 billion (CHF6.6 billion in asset management)
Number of employees: More than 700
Offices: Geneva, Zurich, Basel, London, Paris, Luxembourg, Madrid, Barcelona, Seville, Valencia, Montreal and Dubai
Ownership: Unlimited liability partnershipend of infobox
Copyright The Financial Times Limited 2019