Despite a roller-coasting stock market and growing investor doubts about the efficiency of money managers, organisers of Switzerland’s biggest investment funds fair remain upbeat.This content was published on February 5, 2004 - 17:09
More than 90 fund managers, representing about 80 per cent of the Swiss market, promoted their wares at the three-day “Fonds’04” fair in Zurich.
The funds are effectively competing for a slice of Switzerland’s growing market for managed funds, estimated to be worth hundreds of billions of francs.
And even though many investors were badly burned by the recent bull market, more than SFr60 billion ($48 billion) has been invested in Swiss funds over recent years.
Thomas Hinder, a spokesman for fair organisers Bevag, said the funds industry was growing rapidly, in spite of the stock-market wobbles.
“When we started six years ago, there were about 20,000 funds around the world, and now we have about 50,000,” Hinder told swissinfo.
“People are going mad about funds,” he said.
Picking a winner
Hinder said the three-day fair was designed to help investors sift through the staggering range of investment options on offer.
“We know that after the correction of the past few years, many said ‘OK, I’m fed up with choosing my own stocks, I’m going into a fund’.”
However, Hinder admitted that not all managed funds were equal.
“Two-thirds of the funds are not as good as they could be and one-third are very good,” he said.
But for ordinary investors, busy with daytime jobs, there is often little alternative to entrusting their money to a professional investor.
“If you have enough time and skills you can do it by yourself,” Hinder said.
“But you wouldn't fix your own teeth, so if you don’t have the knowledge you need a specialist."
While this year’s fair included many well-known fund managers, new opportunities were also showcased.
One sector enjoying a surge in interest was the market for hedge funds, also known as alternative investments.
Diana Hill from the Swiss-based Man Investments, which has some $35 billion under management, said hedge funds were designed to make money on both falling and rising markets.
“[They're] totally independent, if you like, of market movements,” she said.
Although hedge funds have traditionally been the preserve of professionals, Hill said ordinary investors were increasingly getting involved.
“Over the past two to three years, [they've] become very mainstream,” Hill said.
“An investor with assets of say a million francs upwards would probably have already invested in stocks, bonds, cash and have his home, and would be looking to include a portion of his assets in a hedge fund,” she said.
Most first-timers typically put between 15 and 20 per cent of their portfolio in a hedge fund, according to Hill.
Another growth sector is the market for so-called exchange traded funds (EFTs), which match a given market index, such as the Swiss Market Index or the Dow Jones.
Marcus Walz, the international sales manager of Indexchange, a Munich-based investment house, said EFTs were an efficient way of getting exposure to an entire market, without the cost associated with managed funds.
“During the past couple of years we all saw the bad markets and the fact that asset managers of actively managed funds didn’t do a very good job,” Walz said.
“All of a sudden, people saw that [active funds] had higher costs and still fell below the market,” he said.
The Swiss funds fair runs until Saturday.
swissinfo, Jacob Greber in Zurich
Managed funds pool investors' money and invest in financial products - usually shares and/or bonds. They actively manage customers' portfolios to try to maximise return on investment.
Exchange traded funds simply try to match the performance of a share index. The management fees are usually far less than managed funds.
Hedge funds operate in a similar way but typically invest in more “exotic” financial instruments that may increase the risk of investment loss.
They are not subjected to the same degree of regulation as managed funds.
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