Fund management companies and managers of collective assets

The system of the Financial Institutions Act

Since 1 January 2020 the licensing of the institutions that manage funds has been governed by the Financial Institutions Act. The Act established a hierarchy of licences in which a higher licence includes the lower ones. At the bottom are portfolio managers and trustees, who are supervised by supervisory organisations under FINMA’s oversight and whose regime is described in chapter H.III. Above them come managers of collective assets, fund management companies, securities firms and banks, all of which are licensed and supervised directly by FINMA.¹ The transitional period for existing institutions ended on 31 December 2022.²

Fund management companies

A fund management company must be organised as a stock corporation with its registered office and head office in Switzerland. Its share capital must be divided into registered shares, and its board of directors must have at least three members. The company and the custodian bank must be independent of each other. The core task of a fund management company is to manage at least one collective investment scheme autonomously and in its own name. That task includes the selection and valuation of investments, the calculation of net asset values, the setting of issue and redemption prices, the determination of distributions and the exercise of the rights attached to the fund’s assets.³ Beyond this core, a fund management company may act as representative of foreign funds, manage individual portfolios and provide related services.

The capital requirements are substantial. A fund management company must hold minimum capital of CHF 1 million and additional own funds that increase with the assets of the funds it manages, up to a maximum of CHF 20 million.⁴ These requirements, together with the organisational demands of a fund management company, explain why the Swiss market is dominated by a limited number of large fund management companies, many of them in Zurich and Basel. Many smaller managers use so-called white-label fund management companies, which set up and administer funds on behalf of third-party managers who retain the investment decisions under a delegation agreement.

Managers of collective assets

The manager of collective assets is the licence for firms that manage the portfolios of collective investment schemes or the assets of occupational pension schemes. A foreign manager that employs staff in Switzerland to manage such assets on a permanent basis also needs a licence for its Swiss branch.⁵ The applicant must have an appropriate organisation, minimum capital of CHF 200,000 and own funds that cover at least one quarter of its fixed costs. In addition, it must hold own funds of 0.01 per cent of the assets under management above a threshold, unless it has adequate professional liability insurance.⁶

The de minimis rule is of great practical importance for the many small managers in Zurich and Zug. A firm that manages collective investment schemes reserved for qualified investors may operate as an ordinary portfolio manager if the assets under management do not exceed CHF 500 million, or CHF 100 million if leverage is used. The same applies to the management of pension assets up to CHF 100 million, provided that the firm manages no more than 20 per cent of the assets of any single pension scheme.⁷ Many boutique managers begin under this regime and apply for a manager of collective assets licence once they grow. The licence has a value that goes beyond the Swiss market, because European fund managers and supervisors often require that a Swiss delegate be supervised by FINMA.

Delegation

The Swiss fund industry rests on delegation. A fund management company may delegate investment decisions and other tasks to third parties, provided that they are appropriately qualified and, for investment decisions, subject to recognised supervision. Delegation abroad is permitted where the delegate is subject to equivalent supervision and, where the foreign law requires it, a cooperation agreement exists between FINMA and the foreign supervisor.⁸ The responsibility remains with the delegating institution. It must select, instruct and supervise its delegate with care and remains liable for its acts as for its own.

Delegation also works in the opposite direction, and that direction matters more for Zurich. A large part of the assets managed in Zurich belongs to funds domiciled in Luxembourg or Ireland whose management companies have delegated portfolio management to a Zurich manager. This model depends on the willingness of European supervisors to accept Swiss delegates. For that reason the European rules on delegation, and their tightening in the reforms of recent years, are closely watched in Zurich.

Notes

1. Rashid Bahar, “Something Old, Something New: The Supervision of Financial Institutions under the Federal Act on Financial Institutions – FinIA Cleared for Takeoff”, CapLaw 2019, on the transfer of the rules on fund management companies and managers of collective assets from the CISA to the FinIA, their direct licensing and supervision by FINMA outside the dual model applied to portfolio managers and trustees, and their capital and own funds requirements, https://caplaw.ch/2019/something-old-something-new-the-supervision-of-financial-institutions-under-the-federal-act-on-financial-institutions-finia-cleared-for-takeoff/. ↩
2. Goldblum, knowledge base, “FinIA Switzerland: Licence Categories Explained”, on the licence categories under FinIA, the minimum capital of CHF 100,000 for portfolio managers and trustees and of CHF 200,000 for managers of collective assets, the entry into force on 1 January 2020 and the end of the transitional period on 31 December 2022, https://goldblum.ch/knowledgebase/finia-switzerland/. ↩
3. FINMA, “Fund management companies”, on the legal basis in Articles 32 et seq. FinIA and Articles 49 et seq. FinIO, the requirement of a limited company with registered office and head office in Switzerland, registered shares, a board of at least three members, independence from the custodian bank, and the core tasks of managing collective investment schemes, https://www.finma.ch/en/authorisation/asset-management/fund-management-companies/. ↩
4. Rashid Bahar, “Something Old, Something New”, CapLaw 2019, on the minimum capital of CHF 1 million for fund management companies and own funds based on assets under management, capped at CHF 20 million, https://caplaw.ch/2019/something-old-something-new-the-supervision-of-financial-institutions-under-the-federal-act-on-financial-institutions-finia-cleared-for-takeoff/. ↩
5. FINMA, “Managers of collective assets”, on the legal basis in Articles 24 et seq. FinIA and Articles 34 et seq. FinIO, the conditions of an appropriate organisation, minimum capital and further collateral, the management of at least one collective investment scheme or pension scheme, the de minimis thresholds and the licensing of Swiss branches of foreign managers, https://www.finma.ch/en/authorisation/asset-management/asset-managers-of-collective-investment-schemes/. ↩
6. Rashid Bahar, “Something Old, Something New”, CapLaw 2019, on the own funds of managers of collective assets, equal to a quarter of fixed costs up to CHF 20 million plus 0.01 per cent of assets under management unless professional liability cover is sufficient, https://caplaw.ch/2019/something-old-something-new-the-supervision-of-financial-institutions-under-the-federal-act-on-financial-institutions-finia-cleared-for-takeoff/. The minimum capital of CHF 200,000 is given in Goldblum, knowledge base, “FinIA Switzerland: Licence Categories Explained”, https://goldblum.ch/knowledgebase/finia-switzerland/. ↩
7. FINMA, “Managers of collective assets”, on the de minimis thresholds of CHF 500 million without leverage, CHF 100 million with leverage and CHF 100 million for occupational pension assets with a maximum of 20 per cent of any single scheme, https://www.finma.ch/en/authorisation/asset-management/asset-managers-of-collective-investment-schemes/. ↩
8. Dominik Oberholzer (Kellerhals Carrard), “Switzerland: An Investment Funds Overview”, Chambers and Partners, on the delegation of asset management to managers licensed under Article 17 FinIA or Article 24 FinIA and the permissibility of delegation to non-Swiss managers under equivalent supervision, https://chambers.com/content/item/6915. ↩

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.