Switzerland has always been one of the most established jurisdictions offering first-class financial services.  Historically, Switzerland has always been one of the primary locations of offshore investment funds.  However, in the 1980s, the country’s investment fund industry took a backseat when the worldwide investment fund management market took on an immense proportion, and Switzerland’s major competitors adopted attractive investment fund management packages, offering entry to the EU market, flexible regulations, and lower taxes.

However, after a considerable period, Switzerland once again became a primary location for opening investment funds after it has implemented measures in order to compete in the investment fund management market.  The Swiss passed legislations reducing investment fund taxes.  The Investment Fund Law of 1995 was passed which slackened the strict and limiting regulations that have been predominant in the Swiss laws on investment funds.  It has also adopted a modern attitude of maintaining investor protection by expanding transparency regulations.  The Swiss law implemented the principle of reciprocity, with the government giving license to funds which were established in jurisdictions with suitable fund regulatory management.  This reciprocity rule especially relates to the EU.

The Investment Fund Law 1995 of Switzerland recognizes different types of funds, which include securities funds, which are funds issued to the public and traded shares; real-estate funds and other funds.  The latter include money market funds, funds of funds and hedge funds.  The law applies varied requirements for each type of fund.  The Swiss laws also accept limited circulation fund and umbrella fund, which is a collective investment scheme traded as an individual investment funds.  The law also assigned the licensing and supervising of investment funds to the Federal Banking Commission (FBC).  Therefore, companies distributing shares must secure a license with the FBC.  It seems that the legislative measures undertaken by the Swiss were considerably successful in developing a competitive investment fund industry.