Investment funds and asset management companies

Financial Stability Report 2021

Despite the sharp financial market correction at the start of the year, the subsequent recovery was associated with positive returns in 2020. After an extraordinary good year in 2019, with the median investment return amounting to 10% across foundations, 2020 was shaped by the COVID-19 crisis. Following the initial losses in the first quarter, the quick recovery in financial markets led to an overall solid year for the occupational pension system, with the median investment return standing at 3.7%. At the end of 2020, the median cover ratio – i.e. the ratio of available assets to liabilities – stood at 114%, a slight increase from the previous year and a record high since the start of the time series in 2007. Cover ratios of the 17 pension schemes ranged from 100.1% to 127.8% at the end of last year. While these indicators point to an overall stable occupational pension system, similar to other countries, the low interest environment will continue to pose a major challenge in Liechtenstein. With lower returns on assets compared to some years ago, the decreasing trend in conversion rates is set to continue in the years ahead. For a more detailed risk assessment on the occupational pension system, please see the annually published report on pension schemes by the FMA.16

Notwithstanding the challenging environment caused by the global pandemic, the investment funds sector continued its growth path in 2020. The fund sector has shown a dynamic development over the past few years, with both the volume as well as the number of funds increasing. Following the market related dip in assets under management (AuM) in 2018 and the dynamic growth in 2019, the past year was characterized by a small increase of 0.9% to CHF 59.1 billion (Figure 30). Alternative Investment Funds (AIF) showed relatively strong growth in AuM (+5.6% to CHF 27.9 billion), while UCITS (“Undertakings for Collective Investments in Transferable Securities”, –2.7% to CHF 30.8 billion) and IU (“Investmentunternehmen”, –13.0% to CHF 0.46 billion), a domestic fund regime, registered negative growth rates in 2020. The number of sub-funds also increased slightly by 23 to a total number of 763. Overall, the domestic investment funds sector has proved remarkably resilient relative to other countries during the recent COVID-19related high volatility episode.

16 The report is available on the FMA website, see https://www.fma-li.li/de/fma/publikationen/ betriebliche-personalvorsorge-in-liechtenstein.html.