L-QIF – an innovation for the Swiss fund market
In a competitive international market, Swiss funds are often not investors’ first choice, especially as regards alternative investments for professional investors. High time and cost pressure in the approval process mean that even Swiss clients often favor foreign collective investment schemes over their Swiss counterparts. The Swiss limited qualified investor fund (L-QIF) is an innovative response to this problem.
It is intended to enhance Switzerland’s competitiveness as a location for funds and asset management by sparking a renewed increase in the number collective investment schemes launched in Switzerland. This is an opportunity that the Swiss financial sector must seize. Thanks to the L-QIF, qualified investors with strong links to Switzerland will no longer be forced to opt for foreign products. This is a good example of the Swiss fund industry’s efforts to evolve dynamically and, together with other targeted improvements in terms of taxation and international distribution, will play a part in continually strengthening Switzerland’s fund and asset management industry.
The core aim of the draft is to create a flexible form of collective investment scheme under Swiss law that is not subject to FINMA approval and can thus be launched much more quickly and cost-effectively. At the same time, this innovative product, which is to be available only to qualified investors, should guarantee the usual levels of quality and security. The asset manager or fund management company responsible for an L-QIF must be an institution supervised by FINMA. This indirect supervision takes due account of qualified investors’ need for protection. Both open-ended and closed-ended collective investment schemes in accordance with the CISA could be set up as L-QIFs. They would enjoy flexibility as regards their investment universe so as to offer investors the greatest possible choice. In addition, the tax treatment of L-QIFs as Swiss funds would be crucial to their success.