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Impact of coronavirus crisis – more positive outlook for Swiss economy and accelerated trend toward sustainable investments Swiss Asset Managers‘ Survey, H2/2020
Swiss Asset Managers‘ Survey
Summary of findings
Investment experts working at Swiss-based asset management firms are much more positive as regards
the outlook for Switzerland’s economy than they were six months ago. A majority believes that Switzerland
will emerge stronger or at least escape long-term damage thanks to its solid position going into the crisis
and its attractive sector structure. The turmoil on the financial markets resulting from the pandemic has
further accelerated the trend toward sustainable investments.
Economy and The greatest risk for the Swiss economy remains the global economic
geopolitics downturn triggered by the coronavirus crisis and the measures taken to
control it. However, the economic outlook has improved significantly. Al-
most 80% of the investment specialists surveyed view the recovery from the
slump due to COVID-19 as stronger than or roughly as strong as expected.
Many respondents also think that Switzerland will benefit from the crisis
over the long term. Our country’s attractive mix of sectors, low debt, and
generally high level of competitiveness suggest that it could emerge stron-
ger from the pandemic. A majority of those surveyed correctly predicted that
Joe Biden would win the US presidential election, with just under a quarter
tipping Donald Trump. Slightly more than half of the asset management
experts, meanwhile, expect Biden’s presidency to have a negative impact on
the financial markets.
Financial markets and After a rather downbeat assessment of the Swiss stock market in the spring
asset allocation survey, the investment experts are now almost unanimous once more: four
out of five expect a positive return in the next 12 months. Hardly anyone is
forecasting a further sharp correction. The outlook for the euro (EUR) has
finally shown a significant improvement, with 42% of respondents antici-
pating that it will firm up against the Swiss franc (CHF) over the next 12
months. This is the most positive assessment to date of the EUR. The US
dollar (USD), on the other hand, has fallen out of favor with the investment
experts. The record-high budget deficit and sharply lower long-term inter-
est rates in the USA are detracting from the USD’s appeal. While the stock
markets have already staged a marked recovery from their slump earlier in
the year, both equities and alternative investments are still very popular with
investors. Meanwhile, only a small number are planning to increase their
allocations to bonds and cash.
2Swiss Asset Managers‘ Survey
Monetary policy The Swiss National Bank (SNB) continues to enjoy considerable support
among the asset management specialists surveyed, although the percenta-
ge who approve of its current monetary policy has fallen since the spring to
84%. Whereas not a single survey participant wanted the SNB to be more
restrictive back then in the midst of the financial market slump, a minority
now believe that the time has come for monetary tightening. This is also ref-
lected in interest rate expectations. In the last survey, hardly anyone was ex-
pecting the SNB’s negative interest rates to be lifted in the next three years,
but almost one in three now thinks that they will. It is interesting to note the
expectations regarding global inflation after governments and central banks
took ultra-expansionary action in response to the pandemic. A third belie-
ve that we will remain in an environment of low inflation or even deflation.
Another third are of the opinion that the “official” inflation rate, measured
using a basket of goods and services, will stay low, but the above-average
rate of inflation in asset prices will persist. Finally, three out of ten think that
the central banks will succeed in keeping inflation within their target range.
Outlook for the asset The outlook for the asset management industry has improved markedly.
management industry The pessimists held sway like never before six months ago, but now the
percentage of optimists is at a record level. One in three expects revenues
and /or margins to grow, and a further 51% see the outlook as stable. This
turnaround in sentiment can probably be attributed to the strong recovery
on the financial markets and increased demand for savings and investment
solutions due to the crisis. Expectations with regard to employment in the
asset management industry have also improved. Hardly anyone is expecting
staff cuts, while one in three anticipates an increase in their company’s
headcount over the next 12 months. This positive outlook could be explai-
ned by the fact that respondents rate the performance of actively managed
investments during the crisis as better than that of passive products. Active
management not only requires more staff, it is also more profitable.
Sustainable For a majority of the investment specialists surveyed, the financial market
investments turmoil caused by the coronavirus crisis was a catalyst for sustainable in-
vestments. Sustainably managed companies proved to be more resilient on
the whole, so their investors were able to withstand the crisis much better
than they would have with conventional, non-sustainable investments. This
view is backed up by the fact that high inflows into sustainable investments
were set against outflows from non-sustainable ones. Some 62% of all the
asset managers taking part in the survey are already investing more than
a quarter of their assets under management sustainably. This represents a
further increase of around ten percentage points compared with the previ-
ous survey. At the same time, the proportion of asset managers investing
less than 10% sustainably has declined sharply again.
3Swiss Asset Managers‘ Survey
Economy and geopolitics
How do you rate the current level of uncertainty in the geopolitical environment from a Swiss perspective?
Less than half of the asset ma- This proportion is much lower than it was half a
nagement specialists surveyed year ago, showing how the coronavirus crisis has
now rate geopolitical uncertainty pushed geopolitical tensions into the background.
as high from a Swiss perspective.
Where do you currently see the biggest risks for the Swiss economy?
The global economic downturn caused by the pandemic and the measures taken to control it remains the
greatest risk for the Swiss economy. However, the outlook appears to have improved since the last survey:
only around 58% of respondents (down from 84% in the spring) still agree with this statement. The other
risks continue to take a back seat.
Current study Preliminary study
2.6 % 7.9 %
10.5 % 5.3 %
21.1 %
5.3 %
5.3 %
Global geopolitical
risks Global geopolitical
Policy mistake by major risks
central banks Policy mistake by major
central banks
Global economic downturn
Global economic downturn
Strong Swiss franc
Strong Swiss franc
57.9 % Political decisions in 84.2 %
Switzerland Political decisions in
Switzerland
4Swiss Asset Managers‘ Survey
What is your view on the current economic recovery following the coronavirus slump?
Almost 80% of the investment specialists questio-
ned view the economy’s recovery from the corona-
virus slump as stronger than or roughly as strong 34.2 %
as expected. This positive assessment is in stark
contrast to the extremely pessimistic view in the 44.7 %
spring, when hardly any of the survey participants
expected a V-shaped recovery.
The recovery is stronger
than expected
The recovery is weaker
than expected
The recovery is roughly as
21.2 %
expected
What long-term economic damage from the coronavirus do you expect for the Swiss economy?
The asset management experts view the pande-
mic’s long-term impact on the Swiss economy as 39.5 %
anything but negative. Just under a quarter expect
long-term damage. Around 40% anticipate no las-
36.8 %
ting damage, and more than a third believe that
Switzerland will in fact emerge stronger from the
crisis thanks to its solid starting position. The out-
Once the recovery is complete, the-
look is thus much more positive for the long term re will be no meaningful damage
than for the short term. The Swiss economy will suffer for
years to come, resulting in weak
growth and higher-than-average
unemployment
23.7 % Switzerland will profit from the
crisis as it is in a favorable position
with a good industry mix, low debt,
and a highly competitive economy
What is your view on the upcoming US elections and their impact on the global financial markets?
We now know that Biden will be the next President 13.2 %
of the USA, and the imminent changeover in the
White House has made no great waves on the 10.5 %
financial markets. The investment specialists sur- 42.1 %
veyed thus did a fairly good job of predicting the
outcome. More than three quarters of them tipped
Biden to win, with an almost even split between
those who thought this would have a positive or Trump will win, improving the long-
term outlook for financial markets
negative impact on the financial markets. Even
Trump will win, worsening the long-
if Trump had won, there was no clear majority as term outlook for financial markets
to whether the impact on the financial markets 34.2 % Biden will win, improving the long-
term outlook for financial markets
would be positive or negative. Biden will win, worsening the long-
term outlook for financial markets:
5Swiss Asset Managers‘ Survey
Financial markets and asset allocation
What return do you forecast in the next 12 months for Swiss equities?
of survey participants expect the red with the spring survey, when only 71% forecast
82% Swiss equity market to post a posi-
tive return in the next 12 months.
a positive return for Swiss equities. Only a very
small number of experts now think equities will
This is a marked increase compa- fall further by more than 7%.
Which of the following do you consider the biggest driver of returns for the next 12 months?
Almost half of the investment but it has moved into the background somewhat
experts see economic growth as compared with the previous survey, when it was
the key driver of returns for the next considered to be the most important factor. Politi-
12 months. Monetary policy is still cal developments, meanwhile, are still viewed as
regarded as a significant factor relatively unimportant in this respect.
in financial market performance,
What is your 12-month forecast for Swiss 10y interest rates?
A reassessment of interest rate expectations – albeit a tentative one – seems to be taking shape. While a
majority still believe that long-term Swiss rates will be more or less at the same level as they are now in 12
months’ time, the proportion who anticipate higher rates has doubled since the previous survey to more
than a quarter. Meanwhile, only a small number think that rates will fall even further. The massive moneta-
ry and fiscal policy interventions in response to the pandemic could push rates up in the medium term by
triggering higher inflation.
Current study Preliminary study
13.2 %
26.3 %
23.7 %
65.8 %
7.9 %
63.2%
Higher than today Higher than today
Lower than today Lower than today
Exactly the same as today Exactly the same as today
6Swiss Asset Managers‘ Survey
Which currencies do you think will appreciate in value against the Swiss franc in the next 12 months?
The experts’ views on the relative performance of 50 %
the Swiss franc have changed significantly since 45 %
the last survey. Over 42% of respondents (up from
40 %
26%) expect the euro to firm up against the franc
35 %
in the next 12 months. This is the most positive
30 %
assessment of the euro’s outlook to date. The US
dollar, meanwhile, has fallen dramatically out of 25 %
favor with investors. The record-high budget deficit 20 %
and sharply lower long-term interest rates in the 15 %
USA are detracting from the dollar’s appeal. 10 %
5%
0%
EUR USD JPY GBP None of
the above
Which asset class do you expect to increase in your allocation in the next 6 months?
Even though equities have rebounded strongly 100 %
from their slump in the spring, more than half of
the investment experts surveyed plan to increa- 80 %
se their equity allocation further in the next six
60 %
months. After a temporary setback, alternative
investments are back in favor with the experts: 40 %
almost twice as many respondents intend to
increase their allocation to this asset class com- 20 %
pared with six months ago. The same is true (to a 0%
lesser extent) of real estate, while bonds and cash Equities Bonds Real estate Alternative Cash
investments
remain highly unpopular.
7Swiss Asset Managers‘ Survey
Monetary policy
Do you think the Swiss National Bank’s current monetary policy stance is appropriate?
A large majority of the asset management specia- 100 %
lists surveyed still take a positive view of the Swiss 90 %
National Bank (SNB) as regards its monetary po- 80 %
licy. However, the approval rate has fallen slightly 70 %
from 95% in the last survey to 84%. One in eight 60 %
experts thinks that the time has come for moneta- 50 %
ry tightening, a view that was not taken by a single 40 %
30 %
respondent back in the spring.
20 %
10 %
0%
H1 2019 H2 2019 H1 2020 H2 2020
The SNB’s current monetary policy is appropriate.
The SNB should pursue a more restrictive monetary policy
The SNB should pursue a more expansionary monetary
How do you view the CHF’s current valuation?
Only just over a third of the investment experts 2.7 %
surveyed now believe that the Swiss franc is
overvalued. The percentage who view the currency
as fairly valued has risen further to a new high.
As before, very few think that the CHF is actually 35.1 %
undervalued.
62.2 %
Fairly valued
Overvalued
Undervalued
8Swiss Asset Managers‘ Survey
When do you think negative interest rates will be abolished by the SNB?
There had been widespread agreement in previous surveys as to when Switzerland’s negative interest rates
would be abolished, but opinions are now starting to diverge. Almost a third of the experts think that they
will be a thing of the past in two years’ time. Only one in 20 held this view in the spring. For the first time,
on the other hand, there is a group of respondents (8.1%) who do not believe that negative rates will ever
be abolished.
Current study Preliminary study
8.1 % 5.4 % 2.6 %
5.3 %
27 %
In 2022
59.5 % In 2021
In 2023
In 2022
In 2024 or later 92.1 % In 2023 or later
Never
Never
What is your expectation as regards global inflation?
Unprecedented monetary and fiscal stimuli have
been put in place in response to the coronavirus 32.4 %
crisis, and the question now arises as to how they 29.7 %
will affect inflation. A third of respondents think that
we will remain in an environment of low inflation or
even deflation. A further third believe that “official”
inflation, measured using a basket of goods and
services, will remain low, but the above-average rate
5.4 %
of asset price inflation will persist. Three out of ten
take the view that the central banks will succeed in
Inflation will finally start to rise to the
steering inflation into their respective target ranges. level desired by central banks
32.4 %
Very few, meanwhile, see inflation spiraling out of Inflation will overshoot substantially
control going forward. We will be in a low global inflationary or
even deflationary situation due to the
economic slump, technological progress,
and the aging of the population, among
other factors
There will be no “official” global inflation
(price level inflation) but massive asset
inflation over the coming years
9Swiss Asset Managers‘ Survey
Outlook for the asset management industry /
Sustainable investments
What is your expectation regarding the development of the business environment for asset management
companies in Switzerland in the next 12 months?
The outlook for the asset management industry 80 %
has improved markedly. In fact, the investment 70 %
specialists’ responses are more positive than they 60 %
have ever been in the history of the survey. The 50 %
40 %
pessimists held sway like never before six months
30 %
ago, but now the percentage of optimists is at a
20 %
record level. One in three expects revenues and/
10 %
or margins to grow, and a further 51% see the out- 0%
look as stable. This turnaround in sentiment can H1 2019 H2 2019 H1 2020 H2 2020
probably be attributed to the strong recovery on Positive Stagnant Negative
the financial markets and increased demand for
savings and investment solutions due to the crisis.
What do you expect to happen to your company’s headcount in the next 12 months?
In parallel with the much more positive outlook, expectations with regard to employment in the asset ma-
nagement industry have also improved. Only one in 20 respondents expects staff cuts (down from one in
four in the previous survey), whereas a third expect their company’s headcount to increase in the next 12
months. The industry should thus continue to be a net job creator.
Current study Preliminary study
5.4 %
13.2 %
23.7 %
32.4 %
Increase Increase
62.2 % Stay at the current level Stay at the current level
Decrease Decrease
63.2 %
10Swiss Asset Managers‘ Survey
Given the higher market volatility caused by the coronavirus, which of the following statements would you
agree with most?
The question of whether active or passive invest-
ment strategies make more sense is regularly the
subject of heated debate, and a consensus can
rarely be found among investment professionals.
That said, those taking part in the survey seem 45.9 %
45.9 %
to think that actively managed investments have
fared better amid the financial market turmoil
caused by the coronavirus crisis and the rapid re-
covery that followed. Some 46% are of the opinion Active management proved to be the
better investment approach during this
that active strategies delivered superior results, crisis compared with passive, resulting
in lower drawdowns and better returns
while only 8% take the opposite view. A further 8.1 % Passive management proved to be the
46% believe that a combination of active and pas- better investment approach during
this crisis compared with active as it
sive investments weathered the crisis best. fully captured the recovery, resulting in
better returns
A combination of active and passive
strategies delivered the best results
With regard to sustainable asset management (ESG), which factor do you expect to be the main driver for
future growth?
The trend toward sustainable investments conti-
nues unabated. More and more asset managers
32.4 %
are focusing completely – and successfully – on
sustainability. Almost half of respondents now
see persistently strong demand from clients as 48.6 %
the main driver of current and future growth.
Increasing regulatory requirements in terms of Client demand
sustainable investments are also playing a key 2.7 % Product innovation by asset
role, with one in three investment specialists managers
Internal policies
viewing them as the main driver. 16.2% Regulatory/governmental
requirements
What percentage of your total AuM is invested according to sustainability standards (ESG)?
The growing importance of sustai- of the assets in their care sustainably, a further
nability criteria in asset manage- increase of around ten percentage points com-
62% ment is also reflected in assets
under management. A full 62.1%
pared with the last survey. At the same time, the
proportion of asset managers investing less than
of the asset managers surveyed are 10% sustainably has declined sharply again.
already investing more than 25%
11Swiss Asset Managers‘ Survey
What long-term impact has the coronavirus-related crash had on sustainable investments?
A majority of the investment specialists surveyed
8.1 %
see the financial market turmoil caused by the
pandemic as a catalyst for sustainable invest- 24.3 %
ments. Sustainably managed companies proved to
be more resilient on the whole, so their investors
were able to withstand the crisis much better than
they would have with conventional, non-sustai-
nable investments. This view is backed up by the
fact that high inflows into sustainable investments
were set against outflows from non-sustainable
ones. Just 8% of respondents believe that the
67.6 %
crisis had a negative effect on the trend toward
sustainable investments.
It was a clear setback for sustainable investments as market
participants focused on more important things than sus-
tainability
It was a catalyst for sustainable investments as the crisis
highlighted the importance of sustainable business models.
Sustainable investments performed better during the crisis
than the overall market
There was no impact on growth in sustainable investments,
be it positive or negative
12Swiss Asset Managers‘ Survey
About the Swiss Asset Managers’ Survey
The aim of the Swiss Asset Managers’ Survey is Participating in the survey
to assess the views of asset management specia- We would like to thank all participating asset
lists in Switzerland regarding the economic and managers for their support. In case we forgot to
geopolitical outlook as well as expected trends on contact you and you would like to participate in
the relevant financial markets and in the Swiss the next survey, please contact us.
asset management industry. The survey is conduc-
ted every six months by the Asset Management
Association Switzerland and focuses exclusively Contact
on asset management companies operating in Lorenz Arnet
Switzerland. Senior Business Counsel
Lorenz.arnet@am-switzerland.ch
The fourth edition of the Swiss Asset Managers’
Survey was conducted from 2 to 27 October 2020. Sabine Walker
In total, 38 asset management institutions took Marketing
part in the survey, both listed and privately held Sabine.walker@am-switzerland.ch
companies. The participating companies manage
assets of around CHF 2,000 billion in Switzerland. Eva De Matteis
Communications
Eva.dematteis@am-switzerland.ch
Asset Management Association Switzerland
The Asset Management Association Switzerland is the representative association of the Swiss asset
management industry. It aims to strengthen Switzerland’s position as a leading center for asset
management with high standards of quality, performance, and sustainability. To this end, it supports
its members in developing the Swiss asset management industry and adding value for investors over
the long term. The Asset Management Association Switzerland is an active member of the European
Fund and Asset Management Association (EFAMA) and the International Investment Funds
Association (IIFA). Founded in Basel in 1992, the Asset Management Association Switzerland
currently has almost 200 members.
www.am-switzerland.ch
13© Asset Management Association Switzerland 2020. All rights reserved.
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