Bhaskar Laxminarayan, CIO and head investment management APAC, Bank Julius Baer shares his views with Asian Private Banker in ‘The Final Word’, a year in review by the region’s private banking leaders as they share their thoughts and opinions on key issues around industry trends, investments, regulations, and technology in 2021, as well as providing their predictions for 2022.
The last 12 months have been volatile for investors in China, from the meltdown in the high-yield bond sector to regulatory actions targeting sectors such as technology. How are you advising clients to invest in the world’s second-biggest economy in 2022?
China is in transition mode, and that has certain implications for investors. While the long term opportunity remains valid due to the scale and importance of China in world economics, the near term is likely to be clouded by policy stances. While there are signs of moderation the winners from the new growth trajectory in China will need some more investor buy-in time.
What will be the key investment themes that shape both global markets and those in the region in 2022 and how is that feeding into how you advise clients?
Inflation and central bank policy making are likely to be key topics that will dominate investment conversations this year. Though inflation concerns should start to ease through the year, a policy mistake may still be on the cards. The world will move more firmly towards a post-pandemic normal which should set the stage for the next structural growth winners. Some key themes — such as climate change, emission free transportation, cloud computing and artificial intelligence — are likely to stay in focus. Digital assets should gain further acceptance with adoption rates surprising on the upside.
One of the most-repeated views over 2021 was that the ‘60/40’ portfolio is dead, given the ultra-low to negative yields offered in many parts of the sovereign bond markets. From alternatives to commodities to private credit, how are you helping investors to allocate assets in what was traditionally the fixed income part of their portfolios?
The fundamental approach to wealth management is portfolio diversification. In that sense the 60/40 is nothing but a traditional approach to the same. What has possibly changed is the mix and composition of the same. There is certainly more space for including alternates in the mix, be it public or private markets, but the bulk of most large wealth is still likely to pay homage to the traditional assets. Good to note that equities and fixed income markets remain the widest and deepest asset class with a larger access than most other investment options.
Meet 2021’s industry leaders in the full round up of of Asian Private Banker‘s The Final Word 2021.