Winners rationale

At the outset of 2018, private banks were broadly calling for a continued rally following a record-breaking year that delivered record performances and lifted business across the industry. But as the year wore on, sentiment receded, placing the onus on CIO offices to prioritise risk management and downside sooner rather than later. Consequently, Deutsche Bank Wealth Management’s conservative early positioning and profit-taking paid off last year, allowing the bank’s CIO office to generate attractive returns amid a challenging environment.

While the industry as a whole remained bullish in the first quarter, the bank increased allocations to sovereigns due to tensions surrounding US-China tariffs, thereby curbing the subsequent equity losses. Boosting exposure to commodities also allowed end-investors to ride the oil wave driven by higher demand and easing OPEC compliance requirements.

Then in Q2, the bank favoured US equities due to decent economic data and earnings, subsequently using those profits to invest in Europe and Japan equities. During the following six months, the bank shifted its focus and advised clients to “stay invested but hedge” with calls for more diversification towards selective alternatives.

Meanwhile, the bank’s list of high conviction ideas featured many relative winners — long US healthcare, long volatility (VIX Index), long Japanese equities, and long US investment grade — while the bank’s thematic investment ideas remained intact, with particular emphasis placed on cybersecurity, a sector comprising numerous names with remarkable absolute returns in 2018.

Cognisant of the growing importance of keeping clients engaged, the bank expanded the breadth and reach of its content over the year to include more than 350 reports in eight languages available via the Deutsche Wealth Online app, WeChat, and social media channels.

For such a hotly contested award, however, the proof is in the pudding.

During the year under consideration, Deutsche Bank Wealth Management outperformed its peers across seven out of 12 of Asian Private Banker’s quantitative performance metrics, with the absolute returns of its Asia strategic and tactical asset allocations impressing an investor base known for its heavy home bias. In fact, its three-year Asian SAA generated absolute returns of nearly 250 bps per annum higher than the next closest competitor.

Due to the strong single and multi-year performance of its S/TAA strategies, with pronounced outperformance for Asian markets in a year populated by market headwinds, Deutsche Bank Wealth Management’s CIO office proved triumphant in 2018.

Deutsche Bank Wealth Management is Asian Private Banker’s Best Private Bank – CIO Office of the Year for 2018.