Moving from the bright lights of London, New York or Hong Kong to a more provincial financial centre like Zurich may be something of a culture shock to financial services professionals, but what’s life like when your new home is Zug, a sleepy Swiss canton with a population of 26,000?
Deepak Gulati, J.P. Morgan’s global head of proprietary trading is quitting the bank and snubbing London by setting up a $500m hedge fund, called Argentière, in Zug, Switzerland. His team of around 20 people will also move with him.
Zug has long been a hub for hedge funds, with Kinesis Capital, Tiberius Asset Management, Abrias Asset Management, Amplitude Capital and Progressive Capital all based there. And the slow gravitation of foreign financiers towards Zug, as well as Pfäffikon where Man Group and LGT Group have a presence, has led to some lurid reports of hedge fund managers using their ‘black’ credit cards to booze it up in expat bar Mr Pickwicks.
The reality is rather slower-paced. Aside from a Ferrari garage and hugely expensive properties, there are few outward signs of Zug’s affluence. On the surface, it remains “something of a backwater town,” according to one British hedge fund trader who moved there 18 months ago and asked not to be named.
“You don’t move to Zug for the excitement,” he said. “It’s clean, efficient and everyone speaks English. You can go skiing in the winter, or swimming in the lake during the summer and there are plenty of nice, if expensive, restaurants,” he said. “Compared to London, life is quiet.”
Zug is the richest canton in Switzerland and a quarter of its inhabitants are expats, 88% of whom are from Europe, according to the Zurich University of Applied Sciences 2012 Hedge Funds in Switzerland report. It’s also home to an astounding 30,000 registered companies including commodity giants Glencore and Gazprom, largely attracted by the 8.8% corporation tax rate for ‘privileged’ firms – namely, foreign controlled companies with at least 80% of their business deriving from outside Switzerland.
“It’s unfair to suggest that most hedge funds here are just a brass plate,” said the hedge fund trader. “We have infrastructure elsewhere, but a team of five front office staff including our chief investment officer. Most people move here for a job opportunity, but the sector is big enough for people to have other career options locally.”
Most financial professionals move to Zug when they have a family and want to settle down, but convincing a hedge fund wife to move from provincial Switzerland can be a hard sell, and finding a place for your children in one of the highly-coveted expat schools is tough.
Daniel Köppel, managing director of asset manager Zug Finance, previously worked for UBS in New York before settling in the Swiss town. Most expat hedge fund managers move to the Zug for a change of pace, but their wives – used to London or New York – “generally find it a bit boring,” he said. “Zug is a great place to raise your family – the crime rate is low and the schools are good, but it’s not for everyone.”
Gianni Bomio, general secretary for the economic department of canton of Zug, said that expats come to the region for the healthy lifestyle, low crime rate and top international schools.
“Switzerland has a very good tradition of welcoming expats and if they are here for the long term they become ingratiated into the local community,” he said.