How Swiss funds have achieved transparency
As part of the structural reform, §48a fig. 3 of the BVV law governing Pensionskassen investments was put in place to raise transparency in the reporting of asset management costs in the second pillar. The new paragraph did not give any details on which investment vehicles were to be included in the cost reporting and which cost figure was to be applied – this was left for the supervisor (OAK) to specify.
The Social Affairs Ministry (BSV) commissioned the consultancy C-alm to write an opinion on how to implement the new legal requirements, which it did in summer 2012, and “in effect OAK followed our recommendations”, according to Ueli Mettler, partner at C-alm. OAK defined collective investment vehicles as funds, fund-of-funds, Spezialfonds, hedge funds, derivatives on funds, structured products as well as private equity structures and non-listed real estate companies.
For listed private equity structures the supervisor notes that they only count among collective vehicles if they are regulated by a fund supervisory body.
The supervisor sets the total expense ratio (TER) as a default cost figure and lists other calculation concepts, which OAK accepts as equivalent. Each Pensionskasse now has to calculate a TER and all those vehicles where no TER was published or where Pensionskassen did not obtain a TER have to be named in a so-called ‘black list’ in the annual report.