Widespread dispersion of returns within traditional benchmarks, coupled with a growing demand for more than just traditional long-only solutions, continues to lead to greater research demands in Asia’s private banking industry. Although major equity and fixed income benchmarks hummed along in a 2016 that was rich with political drama and central bank teasing, risk drivers leading to divergent movements are becoming visible. The most timely case in point is the growing yield gap in the Franco-German 10-year government bond.
Both credit and rate risk began to climb as the Fed finally signalled its readiness to normalise interest rates in mid-2016. Meanwhile, rising populism and the risk of deglobalisation threatens to redraw trade ties and lead nations to reassess how they fit in the worldwide supply chain, shaking equity price multiples that have traditionally depended on reach.
Rapidly maturing private banks and their clients in Asia do not solely require delegation of traditional long-only stock and bond management duties. Worries about liquidity, correlations and volatility risks are motivating wealth owners and gatekeepers in the region to seek alternative solutions. Price-sensitive investors are scrutinising fees and exploring passive options. Effective asset allocation strategies and techniques are being observed where an appropriate portfolio manager cannot be sourced.
For the second consecutive year, private banks have depended on Morningstar’s leading research capabilities for intel and insights, rightfully selecting it as this year’s Best Service Provider – Fund Research.