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Ukraine war hits Swiss asset management industry

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The Ukraine war has heightened volatility and reduced client appetite for risk. © Keystone / Gaetan Bally

The ongoing war in Ukraine has been partly blamed for losses at a prominent Swiss asset management company. The entire Swiss industry suffered a dip in fortunes in the first six months of year as extreme market volatility reduced the value of investments and caused clients to play safe with their money.

Independent asset manager GAM Group warns that it expects to report a CHF15 million ($15.4 million) pre-tax operating loss for the first half of this year, compared to a CHF800,000 profit for the same period in 2021.

Assets under management have shrunk from CHF99.8 billion to CHF83.2 billion in the first six months of the year. The group has seen net outflows of client money of CHF1.1 billion from its investment management unit and CHF2.5 billion from its fund management services, it said on MondayExternal link.

“During the first half of 2022 we have seen extraordinary economic and geopolitical conditions having a significant impact on markets. As a result of this volatility, clients have been exercising greater caution,” said Peter Sanderson, CEO of GAM Investments.

Last week, the Asset Management Association Switzerland (AMAS) reported widespread outflows of client money across the industry. The value of assets under management in Switzerland has fallen 12% to CHF1.3 trillion in the last six months as the financial markets took a tumble across the world.

“As in the global financial markets, the war in Ukraine as well as the monetary policy caesura [central banks raising interest rates] in the wake of rising inflation rates have also left clear traces in the Swiss fund market,” said AMAS CEO Adrian Schatzmann.

Asset managers look after the money of wealthy people or institutional clients such as pension funds. The service is carried out by banks and independent specialist firms.

Wealth management, another important segment of the Swiss financial sector, adds tailored services for wealthy clients and families, such as advice on managing inheritance through the generations and for philanthropic activities.

Swiss banks manage some CHF3.7 trillion of wealth, according to the Swiss Bankers Association, with around CHF2.2 trillion of that amount belonging to foreign clients.

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