Private Label Funds

Types of Investment Companies

Investment company for securities
With the investment company for securities, for reasons of diversification and investor protection the investment regulations are very comprehensive, and also meet the European standard. As a result, this type of investment company is recognised throughout the EU/EEA (single-licence principle) and there is only a requirement to notify, not to obtain a licence. Investment companies for securities invest at least 90% of the assets in securities and non-certificate-based claims which fulfil the same function, traded either on a stock exchange or another type or regulated market. Investments in other funds which invest in securities (fund of funds) are also possible. Derivative instruments may be used for the purpose of asset management or hedging exchange rate risks. Derivative instruments may not be used for speculative purposes. Precious metals and precious metals certificates are prohibited, however, as is short selling.

Investment company for other assets
This type of fund may invest in assets which are non-readily marketable, subject to substantial price fluctuations, have limited risk distribution or where valuations cannot be readily carried out. It cannot be classified as a securities fund, nor a real estate fund. Particular notification is required if the fund’s assets have special risk elements (high investment risks and redemption restrictions) not comparable with those of securities funds. Investment companies for other assets can invest in securities and claims, units in other funds, money market instruments and bank deposits and do not have to comply with restrictions which apply to securities funds, such as those pertaining to derivatives and precious metals. There are no restrictions with regard to the level of liquid assets which can be held, either.

Investment company for other assets with higher risk
The characteristic feature of this type of investment company in comparison to investment companies for other assets is their higher risk profile. Typical for investment companies for other assets with higher risk is/are

a distinct higher risk through the use of loans;

the use of derivative instruments for speculative purposes;

investments in assets where valuations cannot be readily carried out;

investments in assets which are less transparent;

short sales.

Detailed notification of the higher investment risks is required in the prospectus and investment guidelines, on any subscription form and on any advertising.

Investment company for qualified investors
This type of investment company is aimed at one or several qualified investors. Following individuals or companies are qualified investors as defined by law provided that they invest at least 250’000 Swiss Francs or the equivalent value in another currency in the investment company:

banks and finance companies, insurance companies, pension funds, asset management companies;

companies, which total equity exceeded 40 million Swiss Francs in the last business year;

individuals, whose portfolio of securities exceeds one million Swiss Francs or the equivalent value in another currency;

states, corporations under public law, international and supranational organizations.

The investment company for qualified investors needs no operating licence from the Financial Market Authority. The auditor’s confirmation of the following points to the attention of the Financial Market Authority is an essential prerequisite for the formation of the fund:

obligation to accept the mandate;

confirmation that the investment company complies with the law and the executive order;

a simplified prospectus is made and signed by the fund management company and the custodian bank;

in this simplified prospectus, the qualified investors are named and a special risk reminder is made.

As soon as the Financial Market Authority has confirmed the receipt of this confirmation, the launch of the fund can be started.

Investment company for property (real estate funds)
Investment companies for property (real estate funds) invest their assets in real estate in accordance with the principle of risk distribution. A maximum of 20% of net assets can be invested in one particular piece of real estate. Real estate investments which are closely related in terms of performance count as one real estate investment. In order to secure all liabilities, liquid funds – such as short-term fixed-income securities – must be sufficient to ensure that, in addition to the liabilities generated in the course of business, all units to be redeemed can be redeemed and that, moreover, an appropriate reserve of liquidity is held. The sum of borrowings/loans taken out by an investment company for property may not exceed an average of 50% of the market value of all real estate held.

Investment funds with different segments (umbrella funds)
The law also makes provision for investment funds which are split up into segments. The same administrative body, custodian bank and auditors must be responsible for all segments of such a fund. Only one set of fund regulations is produced for all segments.

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