COVID-19 has had serious impacts on economies and investment markets globally - our experts explain what the situation looks like in Liechtenstein.
The Principality of Liechtenstein is as much affected by the COVID-19 crisis as any other country. However, Liechtenstein has no national debt, therefore the economic damage to the country will be limited compared to other countries. But how is Liechtenstein’s asset management industry affected? And why is Liechtenstein attracting assets in these turbulent times? This and other questions will be answered in this weeks AWM video by Claudio Tettamanti, Martin Meyer and Simon Bandi from PwC Lichtenstein.
The Principality of Liechtenstein is as much affected by the Covid-19 crisis as any other country. Here too, there was a lockdown and companies were challenged to adapt to the new situation. However, Liechtenstein has no national debt. So, the economic damage to the country will be limited. Simon, can you confirm this for Liechtenstein’s asset management industry, too?
In these turbulent times, investors appreciate the high level of legal certainty that the country offers. Family offices in particular are interested in structuring their wealth in a sustainable way. Liechtenstein offers for instance many solutions for private label funds and all the players needed to launch an investment fund are within a half hour's drive of the country. But it’s not the fund industry only, right Martin?
Absolutely right! There is a global trend to onshore assets as the OECD is focusing on investment structures in offshore jurisdictions. Liechtenstein is convincing as it combines solutions for asset protection and succession planning with a professional fund industry. That’s exactly what family offices are looking for.
I agree. In addition, the Covid-19 crisis has shown how important political and economic stability is. On the one hand Liechtenstein forms a customs union with Switzerland and has a very strong currency with the Swiss franc. On the other hand thanks to the European Economic Area membership, European law applies in the regulated fund business.
Yes, these are precisely the preconditions that contribute to the positive development in the fund industry. Professional investors are looking for this high stability. Historically, German speaking Europe is Liechtenstein’s core market. But thanks to the EU-passporting for AIF and UCITS, fund promoters from more and more countries are opting for Liechtenstein.
Confirmed also from my side. And looking at the family offices specifically, it’s important to understand that they onshore their assets geographically to the vicinity of where they actually live. The reason is, that substance at the effective place of management is the crucial. So we see a lot of Swiss, German and Austrian family offices establishing their hubs in Liechtenstein. The COVID-19 crisis is accelerating this trend.