Swiss family office steps up manager scrutiny and builds on partnerships

Greater scrutiny of external managers by Swiss family offices is increasing the need for “full transparency” in investment structures, say Julian Boaden and Philip Weis, co-founders and managing partners of Bodewise Cottonfield multi-family office. They say partnerships between managers and family offices are opening access to private equity beyond Switzerland.

The duo, whose family office venture Bodewise joined forces with Cottonfield earlier this year, explain that private market manager performance is increasingly under closer scrutiny as the family office assesses how returns are generated and whether these are repeatable and robust.

"Manager selection and investment analysis absorb much of our time, and for us it really comes down to the people involved and their alignment with their business, such as the team structure and incentives," Weis tells MandateWire Analysis. Indeed, Boaden adds, "given the intensity of our investment screening", the family office "often declines opportunities which do not fit our rigorous criteria".

Partnerships for private market access

Partnerships with managers and other family offices have become an important gateway into private market opportunities for its Swiss families. Weis says its union with Madaus Capital Partners, a Munich-based MFO with experience across direct private equity investing, has given the office "access to a broad range of non-listed private equity buy-and-build transactions across Europe".

Direct private market deals are being sourced through an "ever-expanding" network, says Boaden, who explains that the team "actively engages with direct investments that have a clear focus and a compelling business rationale". Given the entrepreneurial nature of many of Bodewise Cottonfield's partner families, private market investments are a natural fit.

Such opportunities are assessed on how they align within a broader portfolio while maintaining "discipline and diversification", Boaden says. Recent investments include Cutiss, a Swiss late-stage clinical tech-bio company developing personalized skin therapies, Weis explains. "It is also automating its proprietary manufacturing platform to enable scale-up," he adds.

Private market innovation

The office maintains a broad investment appetite, selecting managers across different asset buckets while holding responsibility for the overall strategic and tactical asset allocation. Boaden adds that the office is interested in collaboration across asset classes, and is "quite flexible" on how funds or co-investments are structured, always looking at "what fits best for the client".

"The priority is ensuring alignment with client interests and maintaining full transparency in how the structure is set up," says Weis. The duo say private market innovations, including the development of secondary funds and continuation vehicles, are positive on many levels for economies, investors and wealth creation. "With the growth of primary private markets, the secondary sector has also developed alongside it, adding flexibility and, in some cases, making the asset class more attractive," Weis says. He adds that continuation vehicles are a "logical" market development, but warns that investors must carefully consider the rationale, alignment and pricing of such funds. Boaden says: "We tend to be quite selective in this space."

Balancing long-term time horizons and shorter-term trades

Alongside private equity investments, the company makes tactical investments across public markets where companies are poised for growth. This has included Rolls-Royce, in which the family office invested when its shares fell below £1 in 2022. "We conducted a thorough analysis of the company and anticipated that global air travel and demand for aircraft engine service would recover," Boaden explains. "Three years later, we exited the position after a strong recovery with a return of more than 10 [times our investment], reflecting our disciplined and long-term investment approach."

Asset class decisions also take account of the long-term time investment horizons of families while balancing the need for shorter-term investment outcomes, he adds. Where family wealth is "concentrated" in existing family businesses or legacy assets, Boaden says the office's "role is to gradually diversify their overall wealth in a measured and pragmatic way, without forcing change too quickly".