The Collective Investment Schemes Act today

The concept of a collective investment scheme

The Collective Investment Schemes Act defines collective investment schemes as assets raised from investors for the purpose of collective investment and managed for their account. The investment needs of the investors are met on an equal basis. The definition draws a line between pooled investment, which requires regulation because investors depend on a manager they cannot control, and ordinary commercial activity.¹ Operating companies, classic holding companies and investment clubs fall outside the Act. So do listed investment companies whose shareholders are protected by stock exchange rules and privately held investment companies reserved for qualified shareholders, which the practitioner literature describes as a useful alternative for professional investors that wish to avoid licensing requirements.²

The breadth of the definition has practical consequences for Zurich practice. A club deal among a few family offices, a co-investment vehicle for the employees of a private equity firm or a holding structure for the members of a single family can all raise the question whether a collective investment scheme exists. The answer determines whether a FINMA approval or at least a licensed manager is required. Swiss lawyers therefore spend considerable time on the demarcation. The analysis usually turns on the number of investors, on whether the investors can influence the investment decisions and on whether the vehicle serves a commercial purpose of its own.

Legal forms

The Act offers four legal forms, to which the L-QIF adds a regulatory label, described below, that may be attached to three of them.

The contractual investment fund rests on a collective investment contract under which the fund management company undertakes to manage the fund assets for the account of the investors in accordance with the fund contract, while the custodian bank holds the assets and participates in the contract.³ The fund has no legal personality of its own. In insolvency, the assets of the fund are segregated from those of the management company for the benefit of the investors, a feature that has given investors confidence since 1967.

The investment company with variable capital, or SICAV, is a company whose capital and number of shares are not fixed in advance. Its capital is divided into entrepreneur shares, held by the founders, and investor shares. A SICAV may be self-managed, in which case it needs its own licence, or it may delegate its administration to a licensed fund management company. The investment company with fixed capital, or SICAF, is a stock corporation whose sole purpose is collective investment and which falls under the Act only when its shares are neither listed nor limited to qualified shareholders. The limited partnership for collective investment, or KmGK, is a closed-ended vehicle reserved for qualified investors. Its general partner must be a stock corporation domiciled in Switzerland, and its purpose is typically risk capital, real estate or alternative investments.⁴

The choice among these forms is less open than it appears. The contractual fund dominates for open-ended products. Swiss SICAVs exist mainly as umbrella structures for institutional investors or as vehicles for single families. The KmGK has not displaced the Guernsey, Jersey, Luxembourg or Delaware limited partnership that international private equity investors expect.

Fund categories

Open-ended Swiss funds fall into categories that determine what they may invest in and how much risk they may take. Securities funds invest in liquid securities and are broadly comparable to European UCITS funds. Other funds for traditional investments may use higher leverage and hold precious metals or commodities. Other funds for alternative investments may pursue hedge fund strategies with a high level of risk. Real estate funds invest directly or indirectly in real estate and form a separate category with special rules on valuation, borrowing and the right of first refusal of existing investors.⁵

Swiss real estate funds deserve a special mention because they have no close equivalent abroad. Many are listed on the SIX Swiss Exchange, where they trade at a premium or discount to their net asset value. They have long been a favourite investment of Swiss pension funds and private investors seeking stable income from residential property. A fund that holds its properties directly pays tax on the income and wealth attributable to those properties at the fund level, which relieves the investor from paying tax on that part of the income.⁶

Approval, custody and supervision

A Swiss fund that is open to non-qualified investors, and most funds reserved for qualified investors, require the approval of FINMA before launch. FINMA examines the fund contract or the articles of association, the prospectus and the key information document. It also checks whether the fund management company, the custodian bank and any delegated asset manager hold the necessary licences. Practitioner commentary describes the approval of traditional Swiss funds as a step that can make a launch lengthy compared with an unregulated vehicle.⁷ FINMA has in recent years introduced faster procedures for standard products. The fundamental structure of prior approval nonetheless distinguishes Switzerland from jurisdictions such as Luxembourg, where the reserved alternative investment fund needs no product approval at all.

Every Swiss fund requires a custodian bank. The custodian must be a Swiss bank or the Swiss branch of a foreign bank. It holds the fund’s assets, issues and redeems units, handles payment flows and supervises the fund management company’s compliance with the law and the fund contract. The custodian thus provides a second line of control, which reflects the model of 1966. For funds holding crypto-assets, the custodian must be able to hold digital assets securely and in segregated form.⁸ Each fund is further audited by a licensed audit firm, which reports to FINMA on the fund and on the institutions involved.

Liquidity risk has received more attention since the market turbulence of 2020 and 2022. According to Lenz & Staehelin, FINMA now expects more robust stress tests and better crisis planning under the revised Article 108a of the Collective Investment Schemes Ordinance.⁹ The emphasis reflects the international debate about open-ended funds that promise daily liquidity while holding less liquid assets. It also mirrors the European reform of 2024, which obliges managers of open-ended funds to select liquidity management tools from a harmonised list.

Qualified investors and distribution after the Financial Services Act

The concept of the qualified investor is the hinge of Swiss fund regulation. Funds reserved for qualified investors enjoy far-reaching relief, and foreign funds offered only to qualified investors need no FINMA approval. Since the entry into force of FinSA on 1 January 2020, qualified investors within the meaning of the Collective Investment Schemes Act are in principle the professional clients defined in FinSA. They include banks, insurers, fund management companies, pension funds with professional treasury operations, large companies and high-net-worth individuals who have opted out of retail protection.¹⁰ Retail clients who have concluded a long-term discretionary management or advisory agreement with a supervised financial intermediary are also treated as qualified investors, unless they declare that they do not wish to be. This rule is of great importance for private banks and independent managers in Zurich, whose mandate clients can thereby invest in qualified investor funds without further formalities.¹¹

FinSA also changed the concept of distribution. The old notion of “distribution” was replaced by that of “offering”, defined as any invitation to acquire a financial instrument that contains sufficient information on the terms of the offer and the instrument. Retail clients must receive a key information document in English or in an official Swiss language, and the European PRIIPs key information document is accepted as equivalent. Only funds approved by FINMA, with a Swiss representative and a Swiss paying agent, may be offered to non-qualified investors.¹² For foreign funds offered exclusively to qualified investors, the regime is described in the practitioner literature as extremely liberal, since it requires no registration with FINMA or any other authority. A Swiss representative and paying agent must nevertheless be appointed when the fund is offered to high-net-worth individuals who have opted out of retail protection.¹³

This openness is a deliberate choice. Switzerland has kept its domestic market wide open to foreign funds, in the hope that a liberal regime would make the country attractive for international managers and that other jurisdictions would reciprocate. The first expectation has been met in part, since Zurich is a major distribution hub for Luxembourg and Irish funds. The second has not been met at the level of the European Union, as the section on market access below explains.

Notes

1. Art. 7 para. 1 CISA (SR 951.31) contains the definition of collective investment schemes. Art. 2 para. 2 CISA excludes, among others, operating companies with commercial activity, holding companies and investment clubs whose members can look after their own financial interests. Bilingual edition, https://www.droit-bilingue.ch/de-fr/9/95/951.31-7-7.html and https://www.droit-bilingue.ch/de-fr/9/95/951.31-2-5.html. ↩
2. Dominik Oberholzer (Kellerhals Carrard), “Switzerland: An Investment Funds Overview”, Chambers and Partners, on the investment company in the form of a stock corporation as an alternative for qualified investors outside the licensing requirements where the shareholders are qualified investors or the shares are listed, and on the relevance of a low-tax canton for such companies, https://chambers.com/content/item/6915. ↩
3. Dominik Oberholzer (Kellerhals Carrard), “Switzerland: An Investment Funds Overview”, Chambers and Partners, describing the contractual investment fund as the most common structure, based on a fund contract between investors, the fund management company and the custodian, and noting that the custodian must be a Swiss regulated bank or the Swiss branch of a foreign bank, https://chambers.com/content/item/6915. ↩
4. Goldblum, knowledge base, “CISA Switzerland: fund vehicles, the L-QIF and licences”, on the five vehicle types available under Swiss law, including the self-managed or externally managed SICAV, the closed-ended SICAF and the limited partnership for private equity and venture capital, https://goldblum.ch/knowledgebase/cisa-switzerland/. ↩
5. Dominik Oberholzer (Kellerhals Carrard), “Switzerland: An Investment Funds Overview”, Chambers and Partners, on the four Swiss fund categories of securities funds comparable to UCITS, other funds for traditional investments, other funds for alternative investments with a high level of risk, and real estate funds, https://chambers.com/content/item/6915. ↩
6. Art. 49 para. 2 of the Federal Act on Direct Federal Tax (DBG) treats collective investment schemes with direct real estate holdings under Art. 58 CISA as legal entities, and Art. 66 para. 3 DBG subjects them to profit tax on the income from their direct real estate holdings, bilingual edition, https://www.droit-bilingue.ch/de-fr/6/64/642.11-49-57.html and https://www.droit-bilingue.ch/de-fr/6/64/642.11-66-76.html. Cantonal law provides correspondingly for the capital attributable to the properties. ↩
7. Goldblum, knowledge base, “CISA Switzerland: fund vehicles, the L-QIF and licences”, on the product authorisation step as the element that makes Swiss fund launches lengthy and on the faster route offered by the L-QIF for managers that are already licensed, https://goldblum.ch/knowledgebase/cisa-switzerland/. ↩
8. Goldblum, knowledge base, “CISA Switzerland: fund vehicles, the L-QIF and licences”, on the requirement that every CISA fund appoint a custodian bank and on the particular demands on custodians of funds holding digital assets, https://goldblum.ch/knowledgebase/cisa-switzerland/. ↩
9. Lenz & Staehelin, “Investment Funds 2026 – Switzerland: Trends and Developments”, Chambers Global Practice Guides, on liquidity risk management under Article 108a CISO with more robust stress tests and improved crisis planning, and 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. ↩
10. François Rayroux and Sandrine Chabbey (Lenz & Staehelin), “Offering of investment funds under the new Swiss Financial Services Act – a change of paradigm”, International Bar Association, on the treatment of professional and institutional clients as qualified investors under Article 10(3) CISA, the position of opted-out retail clients, the key information document and the conditions for offering foreign funds to non-qualified investors, https://www.ibanet.org/article/127DC29B-24CE-4380-883E-AD1CC49F54F8. ↩
11. Art. 10 para. 3ter CISA, inserted by the Annex to FinSA with effect from 1 January 2020, bilingual edition, https://www.droit-bilingue.ch/de-fr/9/95/951.31-10-10.html. The provision covers retail clients for whom a supervised financial intermediary, or a foreign intermediary under equivalent prudential supervision, provides portfolio management or investment advice within a long-term relationship. ↩
12. François Rayroux and Sandrine Chabbey (Lenz & Staehelin), “Offering of investment funds under the new Swiss Financial Services Act – a change of paradigm”, International Bar Association, on the definition of an offer, the key information document for retail clients, the acceptance of the European PRIIPs KID and the requirements for offering foreign funds to non-qualified investors, https://www.ibanet.org/article/127DC29B-24CE-4380-883E-AD1CC49F54F8. ↩
13. Dominik Oberholzer (Kellerhals Carrard), “Switzerland: An Investment Funds Overview”, Chambers and Partners, on the liberal regime for offering foreign funds to qualified investors without registration and on the requirement of a Swiss representative and paying agent for offers to opted-out high-net-worth individuals, 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.