Access to the European Union and other markets

The missing passport

The single greatest structural handicap of Swiss asset management is the lack of access to the European single market for funds. A Swiss fund cannot be a UCITS fund, because the UCITS directive applies only to funds established in a member state of the European Economic Area. A Swiss fund can therefore be marketed to retail investors in the European Union only in the rare cases where a member state admits foreign funds under its national law. For alternative investment funds, the directive on alternative investment fund managers (AIFMD) of 2011 provided for a possible extension of the marketing passport to managers and funds from third countries. That extension required an assessment by the European Securities and Markets Authority (ESMA) and a delegated act of the European Commission.

ESMA published its first advice on the extension on 30 July 2015. With regard to Switzerland it found that there would be no significant obstacles to the application of the passport, provided that the Swiss managers concerned were supervised by FINMA. The Swiss industry expected the passport to take effect in the autumn of 2016 at the earliest.¹ The Commission never adopted the delegated act. The reasons were political. The positive assessment of several jurisdictions coincided with the Brexit referendum of 2016, after which any third-country passport would also have benefited the United Kingdom. Relations between Switzerland and the European Union were then further burdened by the long dispute over an institutional framework agreement.² As of September 2026 the passport for third-country managers remains unavailable.

National private placement, reverse solicitation and delegation

In the absence of a passport, Swiss managers reach European investors by three routes. The first is the national private placement regime of each member state, under Article 42 AIFMD, which allows the marketing of third-country alternative funds to professional investors subject to national conditions. The revised directive, known as AIFMD II, which member states had to apply from 16 April 2026, added further conditions. Third-country managers using national private placement may not be established in a jurisdiction listed as high-risk under the European anti-money laundering rules or as non-cooperative for tax purposes.³ Switzerland is on neither list, so the condition does not bar Swiss managers. It shows nonetheless how the private placement route depends on political assessments over which Switzerland has no influence.

The second route is reverse solicitation, the acceptance of investments that professional investors in the European Union make on their own initiative without prior marketing. The route is narrow and legally uncertain, because supervisors interpret the notion of own initiative restrictively. It is unsuitable as the basis of a business model.⁴ The third and most important route is delegation. A Zurich manager sets up a fund in Luxembourg or Ireland with a European management company, which holds the passport and delegates portfolio management to the Swiss firm. The European fund can then be marketed across the Union, while the investment expertise remains in Zurich.

The delegation model has been under pressure for years. European supervisors have questioned whether management companies that delegate most of their functions to third-country managers retain enough substance to be real managers, or whether they have become letter-box entities. AIFMD II responded with enhanced reporting on delegation arrangements, including information on delegates and sub-delegates and on the due diligence performed, and with stricter requirements for sufficient technical and human resources at the level of the European manager. Swiss managers continue to be accepted as delegates, provided that FINMA supervises them and that a cooperation arrangement exists between FINMA and the relevant European supervisor. For firms that do not wish to obtain a FINMA licence, an advisory model has emerged. The European manager takes the investment decisions itself on the basis of recommendations from the Swiss firm. A Luxembourg law firm described this model in March 2026 as an acceptable trade-off that secures access to the European Union in exchange for relinquishing ultimate control over investment decisions.⁵

UCITS as the channel of choice

The consequence of these constraints is visible in the domicile of the funds that Zurich houses promote. The large Zurich houses and most independent managers run fund ranges in Luxembourg or Ireland beside their Swiss ranges.⁶ The Luxembourg or Irish funds are sold to European investors and often to Asian and Latin American clients, while the Swiss funds serve Swiss pension funds and private clients. Foreign funds distributed in Switzerland enjoy easy access to the Swiss market, as described above. The Swiss industry, which manages about a third of its assets for foreign clients, counts improved market access and a clearer political commitment to the financial centre among the conditions of its competitiveness.⁷ The package of agreements whose negotiation Switzerland and the European Union concluded in December 2024 does not cover financial services.⁸ Market access for asset managers therefore remains a matter of unilateral European rules.

The significance of the UCITS channel for particular strategies can be seen in the catastrophe bond segment, which Part E describes. There, Zurich managers run a large part of the global UCITS catastrophe bond fund market from Swiss offices through Irish and Luxembourg vehicles. When ESMA recommended in 2025 that catastrophe bonds be removed from the eligible assets of UCITS funds, Zurich was among the places most affected.⁹ The episode illustrates the dependence of a Swiss industry on regulatory decisions in Brussels over which it has no formal say.

The United Kingdom and beyond

The only comprehensive agreement on mutual market access in financial services that Switzerland has concluded is with the United Kingdom. The Berne Financial Services Agreement was signed on 21 December 2023 and entered into force on 1 January 2026. It is based on mutual recognition of the two regulatory frameworks, which the parties regard as equivalent in their outcomes.¹⁰ For asset managers the agreement allows Swiss firms to provide services from Switzerland to professional and certain wealthy clients in the United Kingdom without a full British licence, subject to registration with the Financial Conduct Authority. It also secures existing and future models under which British funds delegate portfolio management to Swiss managers. The retail business remains expressly reserved to national law.¹¹ The agreement does not compensate for the lack of European access, because the British market for Swiss managers is smaller than the continental one. It does show, however, that access based on mutual recognition is possible between jurisdictions that trust each other’s supervision.

Beyond Europe, Swiss managers depend on bilateral arrangements and on national rules. In the United States, the Securities and Exchange Commission and FINMA agreed in June 2025 on the resumption of the processing of registrations of Swiss investment advisers, which had been delayed by questions about access to records.¹² In Asia, Swiss managers work mainly through subsidiaries in Singapore and Hong Kong and through the mutual recognition and fund connect schemes of those jurisdictions, in which Swiss funds as such play no role. For a Zurich manager with global ambitions, the practical consequence is a multi-domicile structure. A Swiss fund range serves the domestic market, a Luxembourg or Irish range serves Europe and much of the rest of the world, and local vehicles serve particular markets.

Notes

1. Blum&Grob Attorneys at Law, “ESMA Advises on Extension of AIFMD Passport to Swiss Asset Managers”, on ESMA’s advice of 30 July 2015 that there would be no significant obstacles to extending the AIFMD passport to Switzerland, the condition of FINMA supervision and the expectation of the Swiss industry association that the passport could apply from autumn 2016 at the earliest, https://blumgrob.ch/en/update/ausdehnung-des-aifmd-passes-auf-schweizer-asset-manager-2/. ↩
2. ESMA, “ESMA advises extension of funds passport to 12 non-EU countries”, 19 July 2016, finding no significant obstacles to extending the AIFMD passport to Switzerland, https://www.esma.europa.eu/press-news/esma-news/esma-advises-extension-funds-passport-12-non-eu-countries. Federal Council, “No signing of Swiss–EU institutional agreement”, media release, 26 May 2021, recording the decision not to sign the agreement and the end of the negotiations, https://www.admin.ch/gov/en/start/documentation/media-releases.msg-id-83705.html. ↩
3. Audrey Zegers and Elias Nys, “16 April 2026: AIFMD II Finally Takes Effect”, Chambers and Partners, on the application of AIFMD II from 16 April 2026, the enhanced reporting on delegation arrangements, the substance requirements for managers, the new regime for loan origination, the obligation to select at least two liquidity management tools and the new conditions for the use of national private placement regimes under Article 42 AIFMD, https://chambers.com/articles/16-april-2026-aifmd-ii-finally-takes-effect. ↩
4. ESMA, public statement on reverse solicitation (ESMA35-43-2509), 13 January 2021, https://www.esma.europa.eu/sites/default/files/library/esma35-43-2509_statement_on_reverse_solicitation.pdf. The statement concerns the parallel exemption in Article 42 MiFID II and illustrates the restrictive supervisory reading of the client’s own exclusive initiative: any solicitation, promotion or advertising by the firm in the Union excludes it, regardless of contractual clauses or disclaimers. ↩
5. Loyens & Loeff, “The Swiss investment advisory model: a practical route to managing Luxembourg funds” (23 March 2026), on the portfolio management delegation model requiring a FINMA licence for the Swiss manager, the advisory model under which the Luxembourg AIFM retains decision-making authority, and the assessment of the advisory model as securing EU market access in exchange for relinquishing ultimate control over investment decisions, https://www.loyensloeff.com/insights/news--events/news/the-swiss-investment-advisory-model-a-practical-route-to-managing-luxembourg-funds/. ↩
6. The parallel Swiss and Luxembourg or Irish fund ranges of the large Zurich promoters can be seen in their public fund documentation. No single consolidated source was opened for this chapter. ↩
7. Allnews, “Le secteur suisse de l’asset management reste solide” (10 June 2026), on the share of about one third of assets managed in Switzerland for foreign clients and access to international markets as a strategic priority, https://www.allnews.ch/content/news/le-secteur-suisse-de-l%E2%80%99asset-management-reste-solide. Asset Management Association Switzerland (AMAS), “Swiss Asset Management Study 2026”, naming internationally compatible regulation, improved market access and a clearer political commitment to the Swiss financial centre as necessary conditions, https://www.am-switzerland.ch/en/services/data-and-reports/swiss-asset-management-study/swiss-asset-management-study-2026. ↩
8. Federal Department of Foreign Affairs, “Package Switzerland–EU (Bilaterals III)”, https://www.europa.eda.admin.ch/en/package-switzerland-eu, listing transport, free movement of persons, technical barriers to trade, agriculture, electricity, food safety, health and cooperation programmes without any reference to financial services; Federal Council, “Swiss–EU package: Federal Council approves agreements and opens consultation process”, 13 June 2025, https://www.admin.ch/en/newnsb/gjJJsduojrsl43zOAsGVq. ↩
9. Artemis, “Plenum urges European Commission not to adopt ESMA’s UCITS cat bond recommendation” (31 March 2026), on ESMA’s recommendation of June 2025 to exclude catastrophe bonds from UCITS eligible assets and the arguments of the Zurich manager Plenum Investments against it, https://www.artemis.bm/news/plenum-european-commission-esma-ucits-catastrophe-bond-recommendation/. ↩
10. Lenz & Staehelin, “Investment Funds 2026 – Switzerland: Trends and Developments”, Chambers Global Practice Guides, on the entry into force of the Berne Financial Services Agreement on 1 January 2026, https://practiceguides.chambers.com/practice-guides/investment-funds-2026/switzerland/trends-and-developments. ↩
11. velaw.ch, “BFSA: New market access between Switzerland and the UK – What asset managers need to know now” (29 November 2025), on the signing on 21 December 2023, the provision of services to professional and certain wealthy clients in the United Kingdom, the protection of delegation of portfolio management by British funds to Swiss asset managers and the exclusion of retail business, https://www.velaw.ch/en/bfsa-new-market-access-between-switzerland-and-the-uk-what-asset-managers-need-to-know-now/. ↩
12. Lenz & Staehelin, “Investment Funds 2026 – Switzerland: Trends and Developments”, Chambers Global Practice Guides, on the SEC-FINMA agreement of 10 June 2025 resuming the processing of Swiss registered investment adviser applications, https://practiceguides.chambers.com/practice-guides/investment-funds-2026/switzerland/trends-and-developments. ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of September 2025.