Asset Management

What is an independent asset management firm?

An independent asset management firm manages investment accounts on behalf of its clients.  It is deemed independent if is is not affiliated with a bank or any other financial institution.

What is a custodian bank?

A custodian bank holds funds and securities in the name of a client. The bank fulfils the legal obligations and duties concerning cash deposits, stocks, bonds and other assets. It is principally responsible for the custody of a client’s securities and must make sure that the distribution, purchase and sale of securities and offerings are done in accordance with the law.   

What is a power of attorney?

A power of Attorney is a contract between the asset manager and the client whereby the client grants the asset manager the right and the authority to manage designated assets. Based on agreed upon parameters, the manager is authorized to make all transactions on the client’s behalf with the exception of withdrawals.

What is the relationship between the client, the custodian bank and the asset management firm?

The assets of a client are deposited with a custodian bank but are managed by the asset management firm. A client is both a client of the bank and of the asset manager.  Clients maintain total control over their account and can change the management of their account and the corresponding custodian bank at any time.

What is the Swiss Association of Asset Managers (Association Suisse des Gérants de Fortune)?

The Swiss Association of Asset Managers is a self governing body for asset managers in Switzerland. It is recognized by the Swiss Federal Banking Commission and is responsible for maintaining the highest ethical and business standards between asset management firms and their clients.  Geneva Partners is an active member of the Swiss Association of Asset Managers.

Funds

What is a mutual fund?

Funds (mutual funds or unit trusts) manage a portfolio of investments in accordance with various criteria (type of underlying asset or security, asset management policy, investment horizon, fees, methods used to compute the net asset value, frequency of calculation of net asset value, etc.). Shares of these funds can be bought and sold.

What are the advantages of mutual funds?

Mutual funds provide their clients, even those with relatively small investments, with specialized, expert management. The investments made by funds are done to meet the common investment objective of a group.

What is a fund of funds?

A fund of funds (FoF) is a fund which invests in other funds. This type of fund structure is particularly suited for hedge fund management, since it offers an extremely diverse range of investment alternatives. Typically, a fund of Funds manager invests using a broad array of funds and strategies. This kind of investing requires extensive research and experience in order to select the right fund managers, to evaluate risk and to choose the appropriate allocation of assets among various funds.   

What are Hedge funds?

Hedge funds make investments on a non conventional basis. These types of investment encompass different techniques and strategies, often with a particular concentration in one segment. Typically, hedge funds seek to maintain a stable performance that does not fluctuate in accordance with the world’s financial markets. For additional information, see “Using hedge funds”.

What are the most popular hedge fund tools?

There are several hedge fund tools available which reflect a wide variety of techniques, from the simplest to the most complex. 

• Shorting involves selling shares that one does not hold, expecting to buy the shares (cover the short) at a lower price in the near future.  To carry out such a transaction, the manager borrows these securities for a certain period of time from a financial institution. 
• Arbitrage involves taking advantage of market price inefficiencies; for example, buying convertible obligations while selling the underlying equity security.  
• Leverage refers to borrowing to increase the effective size of the portfolio. 
• Derivative products--options, future or private contract--can be used on a speculative basis or to hedge a portfolio.
• Hedge fund management uses micro or macro economics to either identify opportunities in the basic movements of the economy or the  financial markets. It also identifies companies with strong potential or those experiencing difficulties.

What fees are associated with hedge funds?

The fees are variable and depend on the fund. Typically, they consist of a fixed amount (between 1% and 2% of the portfolio) and a variable amount based on the portfolio performance (often between 5% and 20% of the appreciation).   

Can the funds invested in hedge funds be withdrawn quickly?

In most cases, no, but there are exceptions.  Generally speaking, investments carried out by these funds are done on a medium term basis. Still, there are typically “windows” to withdraw from these funds.   Unlike other financial investments, the positions in these funds are not always liquid.  One should count on three to twelve months before a withdrawal can be made.

Swiss banking secrecy 

What is Swiss banking secrecy?

Swiss banking secrecy requires that asset management firms and banks in Switzerland maintain an obligation of discretion towards any information concerning their clients. This “secrecy” provides a privacy zone for clients; as such, it is comparable with the client secrecy maintained by a doctor or lawyer.

The respect for a client’s privacy is one of the fundamental principles of the Swiss legal order, and it is part in the Swiss Constitution (art 13).

Does Swiss banking secrecy provide protection to criminals?

No. Swiss banking secrecy has never been absolute. Swiss banks and their managers are required to maintain the ethical highest standards, in particular within the framework of a penal procedure against one of their clients, whether the offence was made in Switzerland or abroad. On the international level, Switzerland is spearheading an effective battle against organized crime and money laundering, making Switzerland among the most “clean” countries for financial transactions.

Can a client open an anonymous account in Switzerland?

No. The banks as well as the asset manager observe the “know your client” rule which requires the systematic identification of the client and, if necessary, that of the economic beneficiary. These rules were enacted by the banks and the managers themselves to prevent funds of criminal origin. Hence, all the Swiss financial establishments are informed of the identity of their clients, even for numerical accounts.

Who can open a bank account in Switzerland?

The opening of a bank account in Switzerland is accessible to all. The banks and the asset managers can nevertheless reserve the right to refuse clients for a reason.   For example, there might be doubts about the source of the funds.  Swiss law forbids the acceptance of funds perceived to be from criminal origins.

What documents are required to open an account at Geneva Partners?

Our partner banks have granted Geneva Partners the ability to handle the opening of our client accounts on their behalf.

As standard procedure, banks and asset managers are required to verify the identity of their clients.  In this process, a personal meeting is necessary. In all the cases, an official document of identity is required (valid passport or any other equivalent identity paper with a photograph) and, depending on the situation, a certificate on the origin of the inheritance (sale contract, references on behalf of a foreign bank, evidence of the transfer of securities…)   

Does my account have to be in Swiss Francs?

No. Accounts can be opened in euros, USD or in any other major currency.