Distributing funds

How to develop and maintain a distribution network

Distribution in Switzerland has to be undertaken with distributors authorised by the Swiss Financial Market Supervisory Authority to distribute investment funds or with banks. Banks are exempt from requesting such an authorisation.

The representative has to ensure that such distributors are authorised and in good standing. This obligation, besides others, is set out in the Swiss Funds & Asset Management Association (SFAMA) guidelines on distribution.

In the agreement on the terms of distribution between you as a fund management company and CFS as the Swiss representative, we establish a standard distribution agreement based on the SFAMA model distribution agreement and with your required language added. This agreement has to be negotiated and closed with each distributor. The representative is obliged to be party to the agreement. The fund management company may elect to be party to the agreement, too.

We have the advantage of having ongoing relationships with a large number of Swiss distributors during the course of a given year. Therefore, we propose that our clients allow us to negotiate the distribution agreements as drafted and presented in the agreement on the terms of distribution. Based on the availability of a distributor's legal staff, such agreements can be negotiated and signed within three weeks.

The terms of the trailer fees are set down by our clients, as are the administrative details for order passing, confirmation and settlement. There is no need to centralise the Swiss order flow over a Swiss subscription agent. Orders can continue to be transmitted to your transfer agent or custodian.

We would be available to discuss the characteristics of the Swiss market with you.

Our Swiss fund market radar

This service provides you with information on the top distributors in Switzerland and will assist you in planning your marketing strategy.

Our database holds information on the top 100 distributors of investment funds in Switzerland. As a client, you will have access to this data as updated.

The most important distributors in Switzerland are banks. Banks have the advantage of not only being investment advisors to their clients, but also the depositories of their clients' securities and liquidity. They provide clients with a comprehensive solution to their wealth management requirements.

In addition to banks, there are independent asset managers (IAMs), who may hold a mandate to undertake the investment management of their clients' investment portfolios. They offer their clients an independent view of the financial markets. Yet, IAMs do not have a banking licence. Their clients' assets and liquidity have to be deposited with a bank. As a result, there is a risk of double counting between assets held in banks and assets under a mandate of an IAM.

For the reasons mentioned above, banks have a strong advantage over IAMs and can therefore be considered the top distributors in Switzerland.

The market radar comes in two forms:

  • Distributors by assets under management: this top-down list shows the client assets held at each distributor over the last two years.
  • Distributor fact sheets: these documents provide you with information on how the business of a distributor is organised, who is responsible for the decision-making process, by department. There are other elements of key information to be found in the fact sheets.

Our market radar information is foreseen to be of use to both marketing and compliance staff at a fund company.