Study shows: Efficient capital allocation boosts growth, returns and prosperity

A new study by the Asset Management Association Switzerland (AMAS) shows that efficient capital allocation through active asset management makes a measurable contribution to economic growth and higher capital market returns. By directing capital specifically to more productive and innovative companies, positive effects are generated on gross domestic product, productivity, innovation, employment and household income – with tangible benefits for the economy as a whole and for pension provision.

The study, entitled ‘The Economic and Financial Benefits of Active Fund Management for Switzerland’, was written by Florian Weigert, Professor of Financial Risk Management at the University of Neuchâtel. It empirically analyses the economic effects of active capital allocation using data from 20 developed economies over the period from 1990 to 2024. In contrast to previous research, which has focused primarily on fees or relative fund performance, this study is the first to focus on the macroeconomic added value of active asset management.

The starting point is the hypothesis that active fund managers fulfil a key economic function: through selective investment decisions based on fundamental data, they improve the efficiency of resource allocation. Capital flows increasingly into companies and sectors with higher growth potential, better corporate governance and greater innovative strength – with positive repercussions for value creation and employment.

The results clearly confirm this effect. For Switzerland, the study shows that the existing level of active asset management has increased average real GDP growth by 0.43 percentage points and stock market returns by 0.60 percentage points per year – in each case compared to a counterfactual economy that would be characterised exclusively by passive and private investors. Over a period of 35 years, this corresponds to around 16 per cent higher economic output and around 23 per cent higher stock market prices.

The higher capital market returns also have a direct impact on occupational pension provision. Between 1990 and 2024, this resulted in an estimated additional pension fund assets of around CHF 27 billion, which strengthens the financial basis of the second pillar in the long term.

For Switzerland, with its innovation-driven economic structure, internationally integrated capital markets and strong pension system, the study emphasises that active asset management is much more than an investment strategy: it is a relevant factor for productivity, prosperity and sustainable economic success.