"As a small asset manager, we have the first mover advantage"

Olivier Baggi

 

Bluestar Investment Managers is a young Swiss asset manager, founded in 2016. What was your motivation to take the step?

We, the founding partners, have been knowing each other for more than 10 years before setting up the company in 2016. Close professional relationships coupled with true friendship throughout those years helped us to take the step to create an independent asset management company. This happened without external nor internal pressures regarding portfolio management decisions and the type and style of products to be launched and managed. Therefore, at BlueStar we all share the same values of intellectual independence coupled with a strong entrepreneurial spirit.

The asset management market is highly competitive: In your experience, what are the decisive factors for gaining a foothold and generating growth?

The Swiss asset management market is indeed highly competitive, both in terms of fees as well as in the terms of products and strategies. I strongly believe that one has to offer ‘niche’ strategies that are not broadly covered by the big players as is the case with our fund dedicated to space economy. Being a small asset manager allows us to have this first-mover advantage thanks to the flexibility to launch new strategies with comparatively little seed capital. Concerning more mainstream strategies, e.g. multi-asset global allocation funds, we want to distinguish ourselves by being active and flexible. This enables us to take bold decisions whenever warranted and to invest in innovative themes for the medium to long term. In other words, we do not like to be too tightened by a particular benchmark. Nonetheless, we are expected to perform on a consistent level and are closely monitored against potential peers by our investors. This independence allows us to have a close relationship with our investors who throughout these years have certainly appreciated our transparency and intellectual honesty, especially in less favorable periods.

You specialize in themed funds, like space economy. What clientele and needs are you targeting with this?

With thematic funds, we target wealth managers who do their clients’ asset allocation in-house and need specific investment themes in specific asset classes. Our value proposition is a theme and/or sector that can be viewed as a building block in a specific asset class of the wealth manager’s mandates which offers favorable long-term growth potential compared to traditional financial market indices.

After various setbacks, the Ticino financial centre has re-established itself as the third force in Switzerland: What were the decisive forces behind this?

The Ticino financial centre has certainly suffered in the last 20 years due to the various tax amnesties by the Italian governments and the disappearance of the banking secrecy, which all followed in one succession. In the banking sector this has led to a major consolidation. However, this now allows banks to maintain a high standard and a wide range of services for their clients. In addition, the political stability, and the attractive legal and tax system for foreign ultra-high-net individuals and for foreign entrepreneurs to establish business have allowed the Ticino financial centre to regain some lost ground.

Do you perceive the financial centers of Zurich and Geneva as competitors?

Not at all. We do not consider different financial centres as competitors. For us, competition takes place on the product side rather than in geography. Therefore, we consider Zurich and Geneva as great growth opportunities for BlueStar.

How strongly are you focused on the Italian market with Bluestar and what advantages does it offer?

The Italian market is certainly important in terms of size and geographical location. However, due to legal cross-border issues, we cannot serve this market directly. Hence, for the time being, we prefer to concentrate our efforts on the domestic market.

There is a lot of talk in the asset management industry about a shortage of specialists: How do you and the Ticino financial center deal with this?

I do not entirely share this view. Of course, I am speaking from my point of view at BlueStar. Generally, it depends on what type of services you want to provide and on what type of skills you need. On the other side, it also depends on how you want to provide those services, and hence on how you can access the required skills. As mentioned above, BlueStar is a small independent asset manager that cannot afford to hire every specialist it needs. We thus tend to look for partnerships and collaborations with people and companies that have the skills we need. That is precisely the case with our two thematic funds, one on the space economy and the other on the biotech sector. For both, we have formal collaborations with international scientists who advise us on scientific and technical issues and with whom we are in constant contact. Therefore, I believe that specialists can be found. I also strongly believe that we can provide a great service by managing specific strategies out of Lugano with the support of high-profile international academics and specialists, who themselves are based all over the world. Maybe Switzerland must think differently as how to look for and work with specialists, especially in this more and more interconnected world.

In your view, what are the defining future trends in asset management?

In recent times, there has been standardization both at the product level, e.g. the launch of many ETFs including sectoral ones, and at the service level, especially for small and medium-sized clients. However, if one looks closely at many standardized products, such as sectoral ETFs, one can see how the 'usual' five to six stocks tend to dominate this type of index, especially in the technology sector and its subsectors. As a result, many investors are not as diversified as they might think by holding different products in their portfolio. Small to medium-sized active asset managers such as BlueStar certainly have cards to play by offering 'pure-play' sector strategies without having to worry about product capacity and thus offering greater diversification for the investor.