You can learn how to set up a hedge fund in Switzerland in our article below. Switzerland is an attractive jurisdiction for hedge fund managers, and most of the vehicles set up as hedge fund startups operate as offshore funds.
| Quick Facts | |
|---|---|
| Legislation applicable |
Collective Investment Scheme (CIS) legislation, Financial Services Act |
|
Categorization |
CIS, open-ended funds, closed-ended funds |
|
Legal forms of the investment vehicle |
Contractual investment funds (FCP), companies with variable capital (SICAV) |
| FINMA authorization required (YES/NO) |
YES |
| Types of participants accepted | Qualified investors (financial institutions, banks, financial intermediaries, independent asset managers) |
| Local license/authorization required (YES/NO) |
YES, authorization from FINMA |
| Local manager required (YES/NO) |
NO, FINMA authorization is required for foreign managers |
| Custodian required (YES/NO) | YES |
| Audited financial statements required (YES/NO) | YES |
| Hedge fund startup use (YES/NO) | YES |
| Taxation particularities | Withholding taxes apply to FCP and SICAV companies, the income tax levied at cantonal and municipal level applies to individual investors. |
| Registration stages |
– incorporation of the investment fund entity, – submission of documents for authorization with FINMA, – licensing with FINMA. |
|
Documents required for registration |
– prospectus, – statutory documents of the investment company, – details of the custodian, – the investment agreement, – Anti-Money Laundering regulations. |
|
Share capital requirements (if any) |
CHF 500,000 for the SICAV company |
| Registration timeframe (approx.) | Several months |
| Types of assets to invest in |
– commodities, – equity, – land, – real estate. |
| Possibility to operate abroad (YES/NO) |
Yes, provided the Swiss fund obtains authorization from the regulatory body of the respective country. |
| Possibility to set up Swiss cryptocurrency hedge funds (YES/NO) |
Yes, it is possible to open cryptocurrency hedge funds in Switzerland. |
| Available investment strategies |
– selective trading, – general trading, – equity strategies, – event-driven strategies, etc. |
| Special requirements for management companies (if any) |
– they must be based in Switzerland, – they must provide financial guarantees for their operations, – their officers must have good reputation. |
| Possibility to relocate foreign funds to Switzerland (YES/NO) | Yes, it is possible to relocate foreign-based funds to Switzerland. |
| Advantages |
– access to multiple investment strategies, – possibility to invest in a variety of assets, – well-established regulatory framework. |
What is a hedge fund?
A hedge fund is an alternative investment fund that allows gathering capital from multiple investors, which is then used to generate high profits through multiple and diverse investment strategies, which bear more risks compared to other types of funds.
What are the forms of a Swiss hedge fund?
Hedge funds can be created as Alternative Investment Funds (AIFs) in Switzerland.
What are the legal entities under which one can set up a hedge fund in Switzerland?
Businessmen interested in starting a hedge fund in Switzerland may set up one of the following legal entities:
- investment companies with variable capital (SICAV) – a type of investment company which has its capital divided into shares;
- investment companies with fixed capital (SICAF) – it is set up as a company limited by shares, and it is registered following the Swiss Code of Obligations;
- Swiss contractual funds -they are registered under a collective investment agreement signed by the investors, the custodian bank, and the fund management company;
- limited partnership for collective investment (LP) – under this structure, it is necessary to obtain approval for starting the operations on the local market from the Swiss Financial Market Supervisory Authority (FINMA).
You can read about how to create a hedge fund in Switzerland in the infographic below:
What are the steps to open a hedge fund in Switzerland?
After choosing the appropriate legal form of the fund, one must:
- create the incorporation papers: Articles of Association for the SICAV, partnership agreement for the limited partnership;
- register the chosen entity with the Commercial Register;
- open the bank account for the deposit of the capital;
- hire an Investment Fund Manager, if necessary;
- draft the compliance documentation (Anti-Money Laundering, Know Your Client, and internal control rules);
- apply for authorization with the Swiss Financial Market Supervisory Authority.
What are the documents required to obtain a license for a hedge fund in Switzerland?
The following paperwork needs to be drafted when setting up a hedge fund in Switzerland:
- the Key Investor Information Document (KIID);
- the prospectus;
- the management company’s Articles of Association or partnership deed, depending on the structure used.
What are the types of investors a Swiss hedge fund can service?
Hedge funds address mainly professional and qualified investors, among which:
- banks, fund management companies, asset managers, securities dealers, insurance companies, and any other financial intermediaries regulated by FINMA;
- independent asset managers;
- high net worth individuals;
- other types of investors.
Non-qualified investors are those who do not enter the categories mentioned above.
When it comes to high net worth individuals, these must meet a few conditions, among which:
- they have professional experience or education in the financial industry;
- they have a net wealth of at least 500,000 CHF;
- they have a net wealth of at least 5 million CHF;
- they own immovable assets of up to 2 million CHF.
We invite you to watch our video below:
What are the main taxes applicable to Swiss hedge funds?
Investors who are interested in how to start an investment fund operating as a hedge fund must know that the local legislation prescribes the same tax regulations that are available in the case of open-ended and closed-ended retail funds. It is important to know that the corporate income tax will apply as long as the fund is established as a SICAF, in which case, the fund will be taxed at the standard corporate tax rate.
What are the assets in which a Swiss hedge usually invests?
Hedge funds can invest in traditional assets, such as bonds, but also in less common ones, such as:
- private equity;
- real estate;
- commodities.
How long does it take to launch a hedge fund in Switzerland?
Between 12 and 18 months.
Businessmen interested in more details on the registration of a hedge fund in this jurisdiction are invited to contact our affiliates in Switzerland for assistance.