For hedge fund traders, moving from London to Switzerland should have been a no-brainer. The mountains are high, the taxes are low, the air is cleaner and, if annual surveys are to be believed, the quality of life is far superior.

But five years on, the experiment to lure top hedge fund trading talent from London to Switzerland is starting to sour. Brevan Howard’s money managers, unable to persuade their families to relocate, have requested to return to the gilded streets of Mayfair.

Man Group, which had 500 employees in its Swiss office in 2012, now employs just 150. 60 people have departed in the past 12 months from its Pfäffikon operation. Bluecrest Capital Management has an office in Geneva and top J.P. Morgan prop trader Deepak Gulati persuaded 20 London traders across to the sleepy Swiss town of Zug for his hedge fund start-up Argentiere. Yet Switzerland’s allure appears to be fading.

“We’re getting more and more inquiries from candidates looking to relocate away from Switzerland,” says Barry Seath, director of hedge fund headhunters Mirage Recruitment. “Fewer and fewer people want to move to Switzerland. For the last 18 months, it’s been a one-way street.”

There are numerous reasons why hedge fund managers don’t want to be based in Switzerland. For a start, most of them are paid in US dollars, which has been devalued against the Swiss franc in recent months and effectively amounts to a pay cut.

It’s all very well escaping the top UK rate of income tax if you’re a multi-billionaire like Brevan Howard’s Alan Howard or Bluecrest CEO Michael Platt, but it’s less appealing if you’re earning ‘only’ six figures as a trader.

Couple this with the high cost of living in Switzerland, the competition for both accommodation and school places locally and hedge fund professionals have had a hard time selling the country to their families.

Meanwhile, the London hedge fund recruitment market is booming again, says Seath. Hedge funds in Switzerland therefore face a choice of bowing to relocation requests or losing staff to competitors in London.

The relaxed locals

While traders are undoubtedly moving from large hedge funds in Switzerland back to London, the locals are still relatively relaxed about the situation. Belying the big names are hundreds of smaller firms all housing English traders and portfolio managers.

“There are still new hedge funds coming to Switzerland,” insists the CEO of a hedge fund in Zug who wishes to remain anonymous. Yes, it’s hard to get a place on good international schools, but the lifestyle is still appealing, he says.

"My commute is a ten minute walk and you can take a dip in Lake Zug or in Zurich during your lunch hour,” he says.

The streets and bars of Zug and Pfäffikon are filled with English-speakers, he says, who like the slower pace of life. “It’s can be culture shock for a lot of people who move from London or New York,” he admits.

There are also plenty of opportunities available for hedge fund managers in Switzerland, says Thomas Bossard, from headhunters Bianchi & Partners in Zurich. “There are profiles that can only be found abroad,” he says. “If I want to find an African equities portfolio manager, for example, it will be difficult to find locally.”

Markus Fuchs, managing director of the Swiss Funds Association in Basel, says that the low taxes and proximity to customers in mainland Europe means that Switzerland “remains attractive to hedge funds.”

Meanwhile, rules introduced at the end of July by the European Securities and Markets Authority (ESMA) allow hedge funds in Switzerland to market their products across the European union – the so-called passport to companies in the territory under AIFMD rules. “This is a crucial step," says Fuchs.

However, large international hedge funds are more focused on offshore products, so this is less of a concern.