Governing Legal Framework

Swiss investment funds (so-called collective investment schemes or CIS) are constituted and operated pursuant to the Federal Act on Collective Investment Schemes of 23 June 2006 (CISA) and its implementing ordinances, the Ordinance on Collective Investment Schemes of 22 November 2006 (CISO) and the Ordinance of the Swiss Financial Market Supervisory Authority on Collective Investment Schemes of 27 August 2014 (CISO-FINMA). The marketing of Swiss CIS within Switzerland is governed by the Federal Act on Financial Services of 15 June 2018 (FinSA) and its implementing ordinance (FinSO). Fund management entities and collective asset managers fall within the regulatory scope of the Federal Act on Financial Institutions of 15 June 2018 (FinIA).

Classification Framework

Swiss CIS may be organised as either open-ended or closed-ended vehicles (Art. 7 para. 2 CISA). The fundamental distinction relates to the redemption flexibility afforded to investors. Open-ended fund structures grant investors the right to redeem their interests at net asset value (NAV) (Art. 8 para. 2 and 78 para. 2 CISA), with redemption costs borne by the collective assets. By contrast, closed-ended fund structures do not provide such redemption rights (Art. 9 para. 2 CISA).

Alternative investment funds (AIFs) may take the form of either open-ended or closed-ended vehicles, although the use of Swiss CIS for alternative strategies remains rather limited in practice.

A. Open-ended funds

Open-ended CIS may take two legal forms: the contractual investment fund (CIF) or the investment company with variable capital (SICAV) (Art. 8 para. 1 CISA).

Open-ended vehicles are divided into different categories depending on their investment policy: securities funds (Art. 55 et seq CISA), real estate funds (Art. 58 et seq CISA), funds for traditional investments (Art. 70 CISA) and so-called “other funds for alternative investments” (Art. 71 CISA). Redemption frequency for open-ended CIS must be at least on a quarterly basis (Art. 109 para. 1 CISO).

1. Contractual investment fund

A contractual investment fund (CIF) is established through a three-party contractual arrangement involving investors, the fund management company and a custodian bank (Art. 25 CISA). The fund contract is subject to certain requirements (Art. 26 para. 3 CISA; Art. 35a et seq CISO) and must be approved by the Swiss Financial Market Supervisory Authority (FINMA) (Art. 26 para. 1 CISA). Under this set-up, the fund management company manages the collective assets independently, in its own name, and in accordance with the investment fund contract. Investors participate proportionally to their unit holdings (Art. 25 para. 1 CISA). The custodian bank is responsible for safeguarding the collective assets, issuing and redeeming units, and managing payment transactions (Art. 73 para. 1 CISA).

This structure offers significant flexibility, allowing it to adapt easily to specific investment strategies. It avoids the corporate governance complexities found in company forms and generally involves less administrative work, making it efficient and straightforward to manage. However, it also presents some drawbacks. In particular, the title on the assets is held by the management company, which accordingly keeps the authority on all key decisions. The fund lacks legal personality, limiting its ability to enter into contracts directly. Its operation relies on contractual arrangements between multiple parties, which can increase complexity. In addition, transferring interests or planning succession can be more difficult compared to corporate structures.

2. Investment company with variable capital

A société d’investissement à capital variable (SICAV) is defined under CISA as a company whose capital and number of shares are not fixed in advance, divided into company and investor shares, and whose liabilities are limited to its own assets. Its exclusive purpose is collective investment (Art. 36 CISA). Structurally, the SICAV is incorporated as a Swiss public limited company (SA/AG) under the Swiss Code of Obligations (CO), subject to specific rules under CISA and CISO, including in particular exemptions from CO rules on contributions in kind, acquisitions in kind, and special privileges (Art. 37 CISA). The SICAV can be structured as a SICAV which delegates the administration to a management company or as a self-managed SICAV, but self-managed SICAVs are rare in practice due to concerns of the regulator.

As an open‑ended CIS, the SICAV allows continuous issuance and redemption of shares at NAV (Art. 78 para. 2 CISA), subject to permitted restrictions such as temporary suspension. Shareholders are granted economic rights including profit participation (Art. 78 para. 1 lit. b CISA) and liquidation proceeds proportional to holdings (Art. 97 para. 2 CISA), as well as redemption rights (Art. 80 CISA).

Governance is shareholder-based: each share typically grants one vote (Art. 47 para. 1 CISA), with entrepreneurial shareholders retaining exclusive competence over dissolution decisions of the SICAV or its sub-funds (Art. 41 para. 2 CISA). Shareholders have statutory information rights (Art. 84 para. 1-2 CISA) and may seek judicial remedies including special audits or restitution actions for misappropriated assets (Art. 84 para. 3 CISA; Art. 85 CISA).

A SICAV requires FINMA authorisation as an institution and approval of its founding documents (articles of association and investment regulations). For umbrella SICAVs, each sub‑fund must receive separate approval. Any material amendments to investment regulations – such as changes to investment policy or risk limits – require prior FINMA approval under CISA and CISO.

Every open‑ended SICAV must appoint a custodian bank responsible for safekeeping assets, managing share transactions and executing payments. Both the SICAV and its custodian must comply with CISO requirements on eligible assets, diversification, leverage control, liquidity management, stress testing and crisis planning according to the relevant fund category (eg, securities fund, other fund for traditional or alternative investments).

This structure offers several advantages. The key advantage is that the ultimate governance and powers lie with the board of directors, which can include representatives of the investors. Further, it has full legal personality, allowing it to own property and enter into contracts directly. Its corporate governance framework is familiar to institutional investors and provides transparent shareholder rights, including voting and access to information. It is also considered more credible and marketable with certain investor groups and allows for umbrella fund set-ups with multiple sub-funds. However, it involves higher complexity and cost. Establishing the structure requires corporate documents such as articles of association and investment regulations. It is subject to stricter governance duties, more detailed reporting obligations and greater regulatory oversight, leading to higher ongoing compliance and administrative costs.

Other funds for alternative investments

“Other funds for alternative investments” is an open‑ended category of CIS that can be established either as a contractual fund or a SICAV (Art. 8 para. 1 CISA), and is defined as funds whose investments, structures, techniques and restrictions exhibit a risk profile that is typically “alternative” (Art. 71 para. 1 CISA).

Other funds for alternative investments may invest in a very broad range of assets, including securities, precious metals, real estate, commodities, derivatives, units of other CIS, money market instruments and short‑term deposits up to 12 months (Art. 69 CISA; Art. 99 para. 1 CISO; Art. 100 para. 1 CISO). They may also pursue investments that are illiquid, highly volatile, poorly diversified or hard to value, and use techniques such as short selling and significant borrowing, so that the overall profile is characteristic of “alternative” strategies (Art. 71 para. 1 CISA; Art. 100 para. 2 CISO).

Under CISO, these funds may: (i) borrow up to 50% of net assets; (ii) pledge or collateralise up to 100% of net assets; (iii) incur an overall exposure of up to 600% of net assets; and (iv) engage in short selling, with the nature and extent of short selling disclosed in the regulations (Art. 100 para. 2 and 3 CISO). The detailed borrowing, collateral and exposure limits, and the requirement to set them out explicitly in the fund regulations, are key distinguishing features compared with securities funds and “other funds for traditional investments” (Art. 99 para. 2 and Art. 100 para. 3 CISO).

As open‑ended CIS, these funds must appoint a Swiss custodian bank (Art. 72 and 73 CISA). For directly investing alternative funds FINMA may, however, authorise the use of a prime broker for settlement services in place of a Swiss custodian bank (Art. 71 para. 5 CISA). Operationally they function like other open‑ended funds (regular NAV calculation and issue/redemption of units at NAV, subject to possible limitations), but with enhanced risk‑management, leverage and disclosure requirements reflecting their alternative character (Art. 71 para. 3 and 95 para. 1 CISA; Art. 95-100 CISO).

B. Closed-ended funds

Closed-ended CIS may take the form of either a Swiss limited partnership for collective investments (LPCI) or an investment company with fixed capital (SICAF) (Art. 9 para. 1 CISA).

1. Swiss limited partnership for collective investments

A limited partnership for collective investments (LPCI) is a closed‑ended Swiss CIS which takes the form of a special limited partnership for collective investment, in which at least one Swiss general partner bears unlimited liability and is responsible for management, while the qualified‑investor limited partners are liable only up to their committed amount and have no redemption right (Art. 98 para. 1-3 and Art. 110 para. 1 CISA).

The LPCI is based on the ordinary limited partnership under the Swiss Code of Obligations (Art. 594 et seq CO) but supplemented by the specific rules of CISA. The LPCI is a partnership without legal personality that may nevertheless acquire rights, incur obligations and sue or be sued in its own name (Art. 99 CISA in conjunction with Art. 602 CO). It typically involves a promoter, a Swiss AG acting as general partner with unlimited liability and at least CHF100,000 paid‑up capital (Art. 118 para. 2 CISO), and one or more limited partners who provide capital and bear liability only up to their commandite (Art. 98 para. 1 CISA).

Only qualified investors within the meaning of Art. 10 CISA may invest in LPCIs (Art. 98 para. 3 CISA), reflecting the significant risks and commitments of hedge‑fund, private‑equity and similar alternative strategies. Investors have no direct or indirect right to redeem units at NAV (Art. 110 para. 1 CISA). A maximum term is typically set in the partnership agreement (Art. 102 para. 1 lit. e CISA), and the general partner incurs unlimited liability while limited partners’ liability is confined to their commitments, subject to additional contractual obligations such as capital calls and clawbacks (Art. 98 para. 1 and Art. 102 para. 1 CISA).

LPCIs may invest in risk capital, construction and real estate, infrastructure projects, alternative investments and other or mixed forms of such asset classes (Art. 118 para. 1 CISO), allowing broad use for illiquid alternative strategies. They are not subject to specific statutory borrowing limits and are not required to appoint a custodian bank, although custody and payment services can be used if provided for in the partnership agreement (Art. 102 para. 1 lit. j CISA).

An LPCI requires FINMA authorisation as an institution and approval of the product (the partnership agreement and related documents), and any subsequent changes affecting the authorisation or product also need prior FINMA approval (Art. 13, 15, 18 and 20 CISA; Art. 5 CISO).

The general partner manages and represents the LPCI externally (Art. 98 para. 1 CISA; Art. 598 and 600 CO), while limited partners have no management powers and only limited information and control rights under the CO and CISA (Art. 600 and 601 CO; Art. 106 CISA). Economic rights (distributions, waterfalls, fees, capital call mechanics, clawbacks) and any enhanced governance rights for limited partners are largely contractual and set out in the partnership agreement, making that document central to how the LPCI functions in practice (Art. 102 para. 1 CISA).

The LPCI is established pursuant to Art. 98-109 CISA and represents to a certain extent the Swiss equivalent of the English-law limited partnership structure, adapted specifically for collective investment purposes (Art. 99 CISA). It was designed primarily for private equity and alternative investments but may accommodate other asset classes including real estate and infrastructure projects, as reflected in the broad catalogue of eligible investments listed in Art. 118 para. 1 CISO.

This structure is well suited to illiquid and long-term alternative investments. Limited partners benefit from restricted liability, and the partnership allows flexible profit-sharing and compensation arrangements. It can also offer favourable tax treatment for foreign investors and has a strong record in private equity and venture capital settings. However, it comes with certain drawbacks. Limited partners have very limited rights to information and control. Because the structure is closed-ended, investors cannot redeem their interests. The partnership agreements are often complex, involving detailed capital call and distribution terms, and the general partner carries unlimited liability for the partnership’s obligations.

2. Investment company with fixed capital

A société d'investissement à capital fixe (SICAF) is a closed‑ended Swiss CIS set up as a non‑listed limited company (AG/SA) whose sole purpose is collective investment, with fixed capital and fully paid‑up shares, and investor liability limited to their contributions (Art. 110 para. 1 and Art. 111 para. 1 CISA).

Although legally available for both retail and qualified investors, subject to product approval (Art. 110 para. 1 CISA), no SICAFs have been registered in Switzerland under CISA, mainly because of their less favourable tax treatment and comparatively heavy regulatory regime. Fund sponsors therefore tend to prefer other forms such as foreign vehicles, SICAVs, contractual funds or LPCIs for alternative strategies.

3. Limited Qualified Investor Fund

Introduced by the March 2024 revision of CISA, a Limited Qualified Investor Fund (L‑QIF) is a Swiss CIS reserved exclusively for qualified investors, which may take the legal form of a contractual fund, a SICAV or an LPCI, and which is not subject to FINMA product approval or supervision but must be administered by a FINMA‑supervised institution (Art. 118a para. 1 and 118c para. 1 CISA).

The L-QIF is not a new legal type but a regulatory “label” that can be applied to existing Swiss CIS forms with the exclusion of self-managed SICAVs, ie, contractual investment fund, SICAV or LPCI (Art. 118c para. 1-2 CISA). CISA provisions generally apply, with targeted carve‑outs, in particular the exemption from FINMA authorisation/approval and ongoing product supervision, while FinSA/FinIA still govern the licensed institutions that manage or administer the L‑QIF (Art. 118a para. 1 lit. d, 118b and 118g-118h CISA; Art. 2-5 FinSA; Art. 2-4 FinIA).

L‑QIFs may only be offered to qualified investors as defined in CISA/FinSA (eg, institutional/professional clients, certain opted‑out high net worth (HNW) individuals and advised retail clients) (Art. 118a para. 1 lit. a and 10 para. 3-3ter CISA; Art.4-5 FinSA). Although the fund itself is unsupervised, it must be managed and administered by specific FINMA‑authorised entities (typically a fund management company, manager of collective assets or comparable foreign manager), and it must be audited by a FINMA‑approved audit firm, providing indirect supervisory safeguards (Art. 118c para. 1, 118g-118h and 118f CISA; Art. 126h and 126g CISO).

L‑QIFs benefit from broad flexibility in terms of permissible investments, risk diversification and techniques, and may pursue both traditional and alternative strategies with relatively few statutory investment limits (Art. 118d CISA; Art. 126o-126z CISO). Where an L‑QIF pursues alternative investments, the fund name, contractual documents (fund contract, investment regulations or partnership agreement) and advertising must clearly highlight the specific alternative‑investment risks, and for funds in contractual/SICAV form this must include a concise warning clause on the first page (Art. 118n para. 2 CISA; Art. 126p para. 3 and 126z CISO).

This regime offers an efficient option for sophisticated investors. It provides a simplified regulatory process, lower ongoing compliance and greater investment flexibility. The reduced regulatory costs and shorter approval timelines make it an attractive and practical solution for fund launches targeting qualified investors. However, it has certain limitations. It is restricted to qualified investors and does not permit retail access. The absence of FINMA product supervision requires stronger internal governance, and the structure still faces Swiss withholding tax constraints and lacks an EU passport. Despite lighter regulation, a FINMA‑supervised Swiss administrator remains mandatory, and some structural restrictions, such as limits on leverage and side pockets, continue to apply.

Entities used for investment management services provided to Swiss AIFs

Investment management services for Swiss AIFs are typically provided by the following authorised entities:

• managers of collective assets authorised under FinIA (asset managers of CIS);
• Swiss fund management companies (for contractual funds and SICAVs), which may perform portfolio management directly or delegate it to a licensed manager of collective assets or (within de minimis limits) a licensed portfolio manager; and
• foreign managers of collective assets authorised in their home state and recognised by FINMA, where the Swiss AIF or L‑QIF delegates portfolio management to such a foreign entity in line with CISA/FinIA delegation rules.

The establishment process for Swiss AIFs involves multiple stages, including regulatory approvals, documentation preparation and registration requirements.

The main Swiss AIF structures (contractual funds, SICAVs and LPCIs) all require FINMA product and/or institution authorisation, except when structured as L‑QIFs reserved to qualified investors. The process is generally standardised and not excessively long or costly for plain‑vanilla strategies, but timing and expense increase with fund complexity and the need for bespoke structuring.

For Contractual Investment Funds

The fund management company and custodian bank must both be authorised by FINMA (Art. 13 para. 2 lit. a CISA; Art. 72 para. 1 CISA). The fund contract, which is subject to certain requirements, must be approved by FINMA before units can be offered (Art. 15 para. 1 lit. a CISA; Art. 8, 25 et seq CISA).

In addition to the fund contract, the key documentation to be provided as part of the authorisation process includes the constitutive and organisational documents of the fund management company and custodian bank, a prospectus and, where required, a key information document (KID) for retail authorisation.

FINMA aims to approve complete filings within about two months (Art. 17 CISO), but in practice the process for a new Swiss AIF often takes about three to six months depending on the complexity and completeness of the file. Regulatory fees for a standard contractual AIF are considered moderate in an institutional/alternative context as they range from CHF1,000-10,000.

For SICAVs

A SICAV must be authorised by FINMA as an institution (Art. 13 para. 2 lit. b CISA). FINMA must approve the articles of association and the investment regulations, which are subject to certain CISA/CISO requirements. Each sub-fund of an umbrella SICAV requires separate product approval (Art. 15 para. 1 lit. b and para. 2 CISA).

In addition to the articles of association and the investment regulations, the key documentation to be provided as part of the authorisation process includes the documentation relating to organisational rules, board composition and risk management, as well as the offering documents (prospectus and, if offered to non-qualified investors, KID).

For straightforward SICAV AIFs, overall timing of the authorisation process is comparable to contractual funds, whereas complex multi-compartment or alternative strategies can lead to processes of beyond six months. FINMA fees typically range between CHF4,000 and CHF30,000.

For LPCIs

The LPCI itself must be authorised by FINMA as an institution (Art. 13 para. 2 lit. c CISA). The partnership agreement must be submitted to FINMA for approval as the constituting document (Art. 15 para. 1 lit. c CISA).

In addition to the partnership agreement, which must specify investment policy, governance, capital commitments and investor rights, the key documentation to be provided as part of the authorisation process includes corporate documents of the general partner, internal policies for risk management valuation and conflicts of interest, as well as the offering documentation (private placement memorandum or prospectus) tailored to qualified investors.

The authorisation process is similar to the one applicable to SICAVs. FINMA fees depend on the complexity of the specific project.

For L-QIFs

L-QIFs do not require FINMA authorisation or product approval but must ensure that administration is conducted by FINMA-regulated entities and comply with auditing requirements (Art. 118a et seq CISA).

Investor liability in Swiss CIS is generally limited to the amount invested, with specific rules depending on the legal form of the fund.

In Swiss open‑ended CIS, investor liability is limited to their capital contribution. Investors in contractual funds are only exposed up to the value of their units pursuant to the fund contract, which must provide for segregation of the fund’s assets from those of the fund management company and the custodian bank (Art. 25 para. 1, Art. 26 para. 3 lit. a CISA; Art. 35a et seq CISO). In the case of SICAVs, shareholders are liable only up to the amount of their shares; the SICAV’s obligations are limited to its net assets (Art. 36 para. 1 lit. c, Art. 39 para. 1 CISA; Art. 77 et seq CISO). For umbrella structures with several sub‑funds, the law and the constitutive documents must ensure segregation of assets and liabilities between sub‑funds so that the liabilities of one sub‑fund are borne only by the investors of that sub‑fund and not by investors of other sub‑funds (Art. 39 para. 3, Art. 92 para. 2 CISA; Art. 95, 96 CISO).

By contrast, for LPCIs, the limited partners (investors) are liable only up to the amount of their committed capital, subject to any additional funding and clawback obligations agreed in the partnership agreement (Art. 98 para. 1, Art. 100 para. 2 CISA). The general partner must be a Swiss corporation and bears unlimited liability for all obligations of the partnership.

Swiss AIFs (Swiss-domiciled contractual funds, SICAVs and LPCIs that are not authorised for retail distribution) are subject to the general disclosure and reporting regime for CIS in CISA/CISO, with content and frequency largely aligned with retail funds but with more flexibility at the level of product design and risk profile (Art. 35, 52-71, 89-90 CISA; Art. 98-106 CISO).

Disclosure Requirements (Prospectus/Fund Documents)

Swiss AIFs must publish a prospectus or equivalent founding documents. These documents can include a fund contract, investment regulations or a partnership agreement. They must contain all essential information about the fund. This includes the legal structure, investment policy and techniques (such as leverage and short selling), risk profile and factors, fees and costs, valuation rules, and the terms for subscription and redemption. They must also describe any AIF-specific restrictions (Art. 35, 69-71 CISA; Art. 98-100 CISO).

For offers to qualified investors, the focus is on the disclosure required under CISA and CISO, and on the contractual documentation agreed with those investors (Art. 35, 58-59 FinSA; Art. 10, 35 CISA).

Periodic Reporting (Annual and Semi‑Annual)

Swiss AIFs must publish an audited annual report within four months after the financial year ends and an unaudited semi-annual report within two months after mid-year (Art. 89-90 CISA; Art. 104-106 CISO).

The annual report must include audited financial statements, a detailed list of assets, and information on performance. It must also include, where relevant, benchmark comparisons, important changes during the year, and other information required by the ordinance (Art. 89 CISA; Art. 104-105 CISO).

The semi-annual report must include interim financial statements and a list of assets at the half-year date. This report gives investors an updated view of the portfolio and key figures (Art. 90 CISA; Art. 106 CISO).

Ongoing Information and Change Disclosures

Managers of Swiss AIFs must act with loyalty, care and transparency. They must keep investors informed about important facts and changes that affect the fund (Art. 20-24 CISA; Art. 31-34 CISO).

They must notify investors of major changes, such as amendments to the fund contract, investment regulations or partnership agreement. They must also inform investors about changes in the fund management company or custodian bank, or other significant events. Some of these changes must be approved by FINMA and published in the official form (Art. 27-29, 35, 41 CISA; Art. 27-30, 98-99 CISO).

Recent CISO amendments also require managers to publish and report certain “active investment breaches” to the audit firm when investors are not compensated. This rule increases transparency about breaches and how they are handled (Art. 20 CISA; Art. 31-34 CISO).

Risk, Leverage and Liquidity‑Related Disclosures

As Swiss AIFs often use complex investment strategies, their documents must clearly describe investment techniques, leverage (including maximum levels and how it is measured), use of derivatives and short selling, and the related risks. This helps investors understand the fund’s risk/return profile (Art. 69-71 CISA; Art. 98-100 CISO).

The revised CISA rules require SICAVs and fund management companies to have liquidity-risk management and crisis plans. They must also perform regular stress tests. Key elements of these processes must appear in internal documents and, when relevant, be included in investor disclosures (Art. 78a CISA; Art. 108a CISO).

Swiss AIFs do not benefit from the European passporting regime and thus only target Swiss-domiciled investors.

Further, since AIFs are in principle designed for qualified investors, retail investors have limited access to AIFs. Under CISA, qualified investors are typically financial intermediaries (such as banks, securities firms, fund management companies, managers of collective assets, asset managers, trustees), insurance companies, central banks, national and supranational public entities, pension funds and companies with professional treasury operations, as well as managed and advisory retail clients without an “opt-in” declaration and HNW retail clients and private investment structures created for them having declared that they wish to be considered as professional clients (HNW individuals (HNWIs) with opting-out).

Please refer to 2.2.3 Restrictions on Investors for more details.

Please refer to 2.1.1 Types of Investors in Alternative Funds, noting that fund managers use the same legal structures for retail and alternative funds.

Whereas LPCIs as well as L-QIFs are only available to qualified investors (Art. 98 para. 3, 118a para. 1 (a) CISA), open-ended funds are as a rule available to both qualified and non-qualified investors (ie, retail investors). This being said, most AIFs limit themselves to qualified investors, in light of the exemptions from FINMA which are available to them under CISA if they do. Further, for L-QIFs which invest directly in real estate, additional restrictions apply as HNWIs with opting-out and the private structures created for them are prohibited to invest (Art. 118a para. 1 (b) CISA).

In this context, the following investors in particular characterise as qualified investors under CISA (considering that all other types of investors characterise as non-qualified investors under CISA):

• supervised financial intermediaries, ie, banks, securities firms, fund management companies, managers of collective assets and asset managers, as well as foreign financial intermediaries subject to similar prudential supervision abroad;
• Swiss and foreign insurance companies;
• central banks;
• public entities, institutions and foundations with professional treasury operations;
• occupational pension schemes with professional treasury operations and other occupational pension institutions with professional treasury operations;
• companies with professional treasury operations;
• large companies (ie, companies which exceed two of the following criteria: (i) balance sheet total of CHF20 million; (ii) turnover of CHF40 million and (iii) capital equity of CHF2 million);
• private investment structures with professional treasury operations created for HNW retail clients;
• HNWIs with opting-out (as defined in 2.2.1 Types of Investors in Alternative Funds);
• managed and advisory retail clients without an “opt-in” declaration; and
• Swiss and foreign CIS and their management companies which are not already deemed to be institutional clients within the meaning of FinSA that have declared that they wish to be treated as institutional clients.

Swiss AIFs are subject to the rules on “other funds for alternative investments” and, when applicable, the L‑QIF regime. These rules define the main investment limits (Art. 71, 118a-118p CISA; Art. 96, 99-101, 126f-126s CISO). AIFs for qualified investors can use a wider range of investments and techniques than traditional funds. However, they are still subject to certain requirements on leverage, counterparty risk, concentration risk and liquidity management. These limits must be reflected in the fund documents and the fund’s risk management system (Art. 71 para. 1-3 CISA; Art. 96, 99-101 CISO).

“Other funds for alternative investments” can invest in many types of assets and strategies. These may include hedge‑fund‑style portfolios, private equity, venture capital, infrastructure, commodities, precious metals, real estate, derivatives, structured products, securities lending, repos and other CIS. Investments must be measurable in value, and the portfolio must remain diversified to limit risk (Art. 71 para. 1 CISA; Art. 96, 99-101 CISO).

The law allows borrowing, short selling and derivative use within set limits. Leverage and collateral must stay within the levels allowed by CISO and the fund’s own rules. Counterparty exposure must be monitored, and overall market exposure (including derivatives) cannot exceed the allowed multiples (Art. 71 para. 2-3 CISA; Art. 96, 99-101 CISO).

Under the L‑QIF regime, many product‑level investment restrictions are lifted, giving managers more flexibility. However, the L‑QIF must still follow basic principles of risk spreading, appropriate leverage and collateralisation. Open‑ended and real‑estate L‑QIFs must also meet specific limits and diversification rules in CISO (Art. 118a-118p CISA; Art. 126f-126s CISO).

Across all AIF structures, investment limits apply in addition to managerial duties such as risk management, liquidity management and managing conflicts of interest. These safeguards ensure that complex strategies do not create excessive or unclear risks for investors or the market (Art. 20-28, 71, 118 et seq CISA; Art. 12-18, 96, 99-101 CISO).

Fund management companies, SICAVs, LPCIs and managers of collective assets of Swiss AIFs must be authorised by FINMA and be subject to its prudential supervision (Art. 5 para. 1 FinIA; Art. 13 para. 2 CISA). Certain tasks may be delegated to third parties that have the necessary skills, knowledge and experience, and are authorised accordingly (Art. 14 para. 1 FinIA).

As regards custodians, only Swiss banks authorised by FINMA may act as custodian banks for Swiss AIFs (Art. 72(1) CISA). Foreign custodians are not permitted except in limited circumstances:

• For “Other Funds for Alternative Investments” investing directly, FINMA may permit use of prime brokers for settlement services instead of a Swiss custodian bank (Art. 71(5) CISA).
• For L-QIFs, administration requirements are more flexible, potentially accommodating foreign custodians under specific conditions.

As regards auditors of Swiss funds, these must be authorised Swiss auditors or foreign auditors subject to equivalent standards. For L-QFIs, they must be specifically approved by FINMA.

Non-Swiss managers cannot directly manage Swiss AIFs. However, investment decisions may be delegated to non-Swiss fund managers subject to certain requirements. In particular, the delegating institution must ensure proper selection, instruction, supervision and monitoring of the delegated entity. Delegated entities must have the necessary professional skills, knowledge and organisational resources (Art. 14 para. 1 FinIA). They must hold the necessary authorisation under the law of their home jurisdiction and be subject to prudential supervision that is at least equivalent to Swiss standards (Art. 24 FinIA in conjunction with Art. 40 para. 1 FinIO).

Further, the delegation of investment decisions is part of the organisation of the delegating Swiss fund manager (fund management company, SICAV or LPCI general partner) subject to FINMA approval under Art. 13 and Art. 18 CISA. This must be reflected in the fund’s organisational regulations and constitutive documents (eg, fund contract, investment regulations) (Art. 26, 35 and 51 CISA). Where investment decisions are delegated to an entity abroad, FINMA can make such delegation conditional on the existence of an agreement on co-operation and exchange of information between FINMA and the foreign supervisory authority, if such an agreement is required by the foreign jurisdiction (Art. 14 para. 2 FinIA).

Delegation agreements must clearly define the scope of delegated tasks, decision-making parameters, reporting lines and rights of instruction (Art. 14 FinIA; Art. 20 CISA; Art. 12, 18 CISO). The delegating Swiss fund manager retains ultimate responsibility for portfolio management and investor protection, as well as for compliance with the investment guidelines (Art. 14 para. 2 and 4 FinIA; Art. 20 para. 1 CISA).

This framework enables Swiss funds to have recourse to specialised foreign investment expertise while maintaining Swiss regulatory oversight. Common scenarios include the delegation of specific asset class mandates (eg, high-yield credit, infrastructure, hedge strategies) to specialised foreign managers, the sub-delegation of portfolio management for emerging market or real estate exposure, or the use of foreign prime brokers for derivative trading (with custodian exemption where applicable).

For L-QIFs, the requirements applicable to the delegation of investment decisions to foreign managers are less strict.

FINMA’s statutory decision timeline is two months from receipt of a complete filing (Art. 17 CISO). However, in practice, the timeline is often as follows:

• 1. Pre-Filing Consultation (2-4 weeks): exchanges with FINMA to discuss the fund concept, identify the applicable regulatory requirements and address potential issues
• 2. Documentation Preparation (4-8 weeks): draft complete application package incorporating FINMA feedback
• 3. Formal Application (2 weeks): submit to FINMA with all required documentation
• 4. FINMA Processing (2-12 months): regulatory assessment, potential information requests, approval decision
• 5. Post-Approval Set-Up (2-4 weeks): final registrations, service provider confirmations

Certain factors may impact the timing of FINMA’s review. In particular, the overall timeline depends on the completeness and quality of the initial filing: if the documentation is deficient, the authority will issue requests for further information and each additional request can add up to several weeks to the process.

Further, the complexity of the investment strategy can also lengthen the review, as novel investment approaches or unconventional risk profiles usually require a more detailed assessment and may give rise to additional questions or clarifications.

Related‑party transactions are another source of delay, since arrangements with connected parties such as the fund management company, the custodian bank or other group service providers are subject to particularly careful scrutiny, and the authority may require supporting materials such as transfer‑pricing documentation.

Notwithstanding the above, well‑prepared preliminary discussions with the authority generally facilitate a smoother formal application, and constructive pre‑submission engagement tends to reduce friction and follow‑up rounds once the application is formally submitted.

Finally, the authorisation status of key service providers is critical, as delays in licensing the fund management company or the custodian bank will directly extend the overall fund approval timeline, and newly established service providers must first complete their own authorisation procedures before the product can be approved.

There is no legal concept of “pre-marketing” under Swiss law. “Pre-sounding”, “testing the water” or similar verifications aimed at assessing the interest of investors are not subject to any regulatory requirements provided that the information circulated is of a generic nature and does not constitute an “offer” or a “financial instrument” under FinSA.

That being said, it should be noted that the concept of “marketing” is rather broad under the Swiss regulatory framework and includes any activity which is aimed at the acquisition or disposal of a financial instrument (such as fund interests). A careful distinction must therefore be made between the conduct of “pre-marketing” and “marketing activities” as the latter trigger the application of a series of requirements. Please refer to 2.3.6 Rules Concerning Marketing of Alternative Funds for the rules concerning marketing of alternative funds.

Swiss AIFs

The marketing of Swiss AIFs in Switzerland is governed by FinSA and FinSO, which regulate “financial services” including the offer and distribution of CIS. Marketing does not in itself require a FINMA licence, but if it qualifies as a financial service, the provider must comply with the FinSA rules of conduct (information duties, appropriateness/suitability where applicable, documentation and accountability) and organisational requirements (Art. 7-21, 25 FinSA). Financial service providers targeting non‑qualified clients must also be affiliated with a recognised ombudsman (Art. 74-77 FinSA).

Client advisers of Swiss financial service providers not subject to prudential supervision, and client advisers of foreign financial service providers, may operate in Switzerland only if registered in a client‑adviser register (Art. 28 FinSA; Art. 29-31 FinSO). Prudentially supervised client advisers of foreign providers are exempt from registration if they serve only qualified investors (Art. 28 para. 2 FinSA; Art. 31 FinSO).

Incidentally, under the new Berne Financial Services Agreement between the Switzerland and the UK, client advisers of non-Swiss financial service providers can benefit from an exemption from registration if they serve only a certain category of so-called “opted-out” qualified investors (ie, a specific category of HNWIs and private investment structures created for them), subject to certain additional requirements.

Foreign AIFs

Foreign AIFs may be offered to qualified investors without FINMA product approval (Art. 120 para. 4bis CISA). Where foreign AIFs are offered to so-called “opted out” qualified investors (ie, HNW retail clients and private investment structures without professional treasury operations created for them which would be deemed non-qualified investors by law, but have chosen to be treated as qualified investors), the AIF must appoint a Swiss representative and a Swiss paying agent (Art. 120 para. 4 CISA). In addition, the marketing of foreign AIFs must comply with the same FinSA financial‑service rules that apply to Swiss AIFs (Art. 3, 7-21, 28, 74 et seq FinSA).

Swiss AIFs can as a rule be marketed to both qualified and non-qualified investors in Switzerland. Please refer to 2.2.3 Restrictions on Investors for more details.

No specific authorisation or notification is required prior to the marketing of Swiss AIFs in Switzerland.

No post-marketing ongoing requirements apply to firms which have marketed AIFs in Switzerland.

The restriction of most AIFs to qualified investors represents the main investor protection mechanism, thus ensuring participation by financially sophisticated investors capable of understanding and bearing associated risks.

FINMA follows a balanced approach that combines pre-approval with ongoing supervision, applying the principles of proportionality and efficiency (Art. 3-7 Federal Act on the Swiss Financial Market Supervisory Authority of 22 June 2007). FINMA’s supervision is co-operative, and it generally keeps open communication channels with supervised institutions and applicants.

In this context, FINMA often allows preliminary discussions for complex or new projects and provides guidance. Transparency is also promoted through FINMA’s publications, including guidance, circulars, FAQs and annual reports. Further, the authority engages with the industry to clarify expectations and align practices.

Supervisory intensity depends on the complexity and risk of the fund. Simple, standard structures receive faster reviews, while complex or innovative products face closer scrutiny. Similarly, authorisation timelines depend on complexity. Straightforward cases are resolved within a few months, while complex files may take more time.

Swiss retail funds are designed to be offered to both qualified and non-qualified retail investors. Structures and legal frameworks used for retail funds are similar to those used for AIFs, but with additional investor protections and more restrictive investment parameters.

The main legal vehicles which can be used for retail funds are CIFs and SICAVs. As regards the specific fund categories used for retail funds, these are mainly securities funds, real estate funds and other funds for traditional investments.

Please refer to 2.1.1 Fund Structures for more details.

Please refer to 2.1.2 Common Practice for Setting Up Investment Funds for more details on the process for establishing open-ended funds (contractual funds and SICAVs), which are the most commonly used structures for retail funds.

Investor liability in retail funds is identical to the one for AIFs detailed in 2.1.3 Limited Liability.

Retail funds in Switzerland are subject to disclosure requirements that are more extensive than those applicable to AIFs, in particular with respect to their prospectus, the KID and periodic reporting. The content of these documents is governed primarily by the CISA rules on prospectuses and information for investors (Art. 35, 69-75, 89-90 CISA), together with the detailed implementing provisions in CISO (in particular Art. 98-106, 104a-104k CISO).

Prospectus Requirements

The prospectus of a retail fund must provide a clear and comprehensive description of the fund’s risk profile and material risk factors, including, where applicable, information allowing investors to understand whether the fund is conservative, balanced or geared towards growth or higher risk, as well as relevant performance and volatility information (Art. 69-71 CISA; Art. 98-100 CISO).

The prospectus must also contain full disclosure of all fees and costs borne directly or indirectly by investors, including management and performance fees, other charges and costs of third‑party services (Art. 69 para. 2 lit. f CISA; Art. 99-100 CISO). Such disclosures must be presented in a manner that allows investors to assess their impact on returns.

In addition, the prospectus must set out the investment policy and strategy, the permitted asset classes, investment limits and restrictions, as well as any techniques and instruments used and the circumstances in which they may be applied (Art. 69 para. 2 lit. c-d CISA; Art. 98 CISO).

Where available, the fund’s historical performance and relevant benchmark comparisons must also be disclosed (Art. 68-71 CISA; Art. 104a-104k CISO).

Finally, the prospectus must indicate how investors can obtain further information, including contact details, information on account‑opening procedures and references to where the fund contract, articles of association and reports are available free of charge (Art. 69 para. 2 lit. g-h CISA; Art. 98-99 CISO).

Key Information Document

For retail funds, a KID must be provided to non‑qualified investors, which are not party to an individual portfolio management or investment advisory relationship with the relevant fund investment manager (Art. 58-59 CISA).

The KID has to be a concise, easily understandable document containing, in particular, the identification of the fund, a description of its investment objectives and strategy, a synthetic risk/return profile, information on costs and fees, a presentation of historical performance (where available) and clear indications as to where further information can be obtained (Art. 88 and Annex 9 FinSO).

Reporting Requirements

In terms of reporting, retail funds must publish an audited annual report within four months of the end of the financial year and an unaudited semi‑annual report within two months of the half‑year end (Art. 89-90 CISA; Art. 104-106 CISO). The annual report must include the audited financial statements, a detailed inventory of assets, information on the fund’s performance (often including benchmark comparisons), disclosure of significant changes during the year and full transparency on holdings. The semi‑annual report must in particular contain interim financial statements and an inventory of assets.

Additionally, retail funds are expected to ensure appropriate ongoing information to investors, for example through periodic fact sheets, performance updates and notifications of material changes to the fund documents (Art. 35, 41, 65, 66, 69 and 78 CISA)

Swiss retail funds do not benefit from the European passporting regime and thus only target Swiss-domiciled investors.

Fund managers use the same legal structures for retail and alternative funds. Please refer to 2.1.1 Fund Structures for more details.

Unlike AIFs, retail funds are open to all investor categories (qualified and non-qualified).

Swiss retail funds follow the same general rules as other CIS but have stricter investor protection measures and tighter investment limits. These limits depend on the type of fund. The main types are securities funds, real estate funds and other funds for traditional investments. Each type follows specific rules on eligible assets, leverage and risk diversification.

Securities funds invest mainly in transferable securities such as listed and certain unlisted shares, bonds, other fixed‑income instruments, short‑term money market instruments, derivatives and units of other CIS. These assets must meet the rules on liquidity, valuation and risk spreading (Art. 53-55 CISA; Art. 73-79, 86-90 CISO). Securities funds can borrow only on a temporary basis and only up to a small percentage of their net assets. Collateral for securities lending and similar transactions is limited in relation to net assets. Counterparty risk is capped, and portfolios must follow strict diversification rules, including issuer and concentration limits (Art. 55 CISA; Art. 77-79, 86-90 CISO).

Real estate funds invest in properties such as residential, commercial and industrial real estate. They can also invest in real estate rights, real estate companies, real estate‑backed debt instruments and units of other real estate funds. To meet redemptions, they hold some liquid assets like money market instruments (Art. 58-66 CISA; Art. 86-95 CISO). These funds face limits on borrowing and mortgage levels, requirements to maintain sufficient liquidity, caps on counterparty exposure, and diversification rules that cover both property type and geographic distribution (Art. 63-65 CISA; Art. 88-95 CISO).

Other funds for traditional investments are more flexible. They can invest in a wide range of assets, including securities, real estate‑related assets, derivatives, units of other CIS, commodities and precious metals. Their risk profile must remain consistent with a traditional investment approach, and the fund documents must describe the chosen strategy (Art. 71 CISA; Art. 92-96 CISO). Borrowing is limited to a set percentage of net assets. Collateral and total market exposure, including derivatives, are also capped. These funds must respect diversification requirements and maintain sound risk management (Art. 71 CISA; Art. 92-96 CISO).

The regulatory requirements for non-local retail fund service providers are identical to those applicable to AIF service providers. Please refer to 2.3.2 Requirements for Non-Local Service Providers for more details.

The regulatory requirements for non-local managers of retail funds in Switzerland are identical to those applicable to AIFs. Please refer to 2.3.3 Local Regulatory Requirements for Non-Local Managers for more details.

The regulatory approval process applicable to retail funds is identical to the one applicable to AIFs. Please refer to 2.3.4 Regulatory Approval Process for more details.

The rules concerning pre-marketing of retail funds are identical to those applicable to AIFs. Please refer to 2.3.5 Rules Concerning Pre-Marketing of Alternative Funds for more details.

The rules concerning marketing of retail funds are identical to those applicable to AIFs. Please refer to 2.3.6 Rules Concerning Marketing of Alternative Funds for more details.

Swiss retail funds can be marketed to both qualified and non-qualified investors in Switzerland.

No specific authorisation or notification is required prior to the marketing of Swiss retail funds in Switzerland. Non-Swiss retail funds must be approved by FINMA before they can be marketed to non-qualified investors in Switzerland.

No post-marketing ongoing requirements apply to firms which have marketed a retail fund in Switzerland.

Swiss law grants retail investors enhanced protection through FinSA conduct rules (client segmentation, information on risks and costs, appropriateness/suitability tests, documentation and accountability duties, and best‑execution/processing of orders) and the requirement to provide a concise KID for most fund interests, in addition to the CISA/CISO product‑level safeguards (ring‑fencing of fund assets, investment and leverage limits, segregation with a custodian bank, limited investor liability and detailed prospectus/ongoing disclosure rules).

The approach of the regulator for retail funds is identical to the one adopted for AIFs. Please refer to 2.3.11 Approach of the Regulator for more details.