Julius Baer is using a multi-faceted strategy, while Bank of Singapore has added factor-tilted equities and Islamic fixed income, and Pictet Wealth Management is incorporating uncorrelated strategies, all in an effort to shift clients from cash to income generation, according to the banks’ product gatekeepers.

Speaking at Asian Private Banker’s Fund Selection Nexus 2024 Singapore, fund selection heads shared how they are offering more tailored products, like customised model portfolios, to meet clients’ changing needs. Additionally, they explored how investors are balancing bonds, stocks, and alternative investments, and how family offices are adjusting their strategies in 2024.

Julius Baer 

Cheryl Tan, Julius Baer

At Julius Baer, conservative clients concerned about volatility were recommended flexible bond funds with active duration management, while those willing to take on sub-sector risks were advised to invest in emerging markets and hard currency bonds.

Moving to the riskier end of the spectrum, they also positioned multi-asset, income-focused funds as an alternative. The bank’s core-satellite portfolio saw a few changes in the satellite part, shared Cheryl Tan, head of fund specialists, APAC.

“We had to review the holdings where funds with higher growth focus had fallen out of favour, [because] they might struggle in a higher base rate environment. [Instead, we] introduced more hedge funds, private credit, and equity type of investments in the satellite,” Tan explained.

Julius Baer also launched a cross-generational asset allocation for ultra high net worth individuals, increasing the allocation to alternatives and aiming to create a portfolio similar to those of endowments and institutions.

Tan emphasised the need to look beyond the current leaders in AI and explore how these technologies can benefit various sectors like healthcare and financials. “There’s even alternative hedge funds that actually use AI to help with their trading. So that’s one of the ideas that we have… to look beyond just purely the existing winners in AI.”

Bank of Singapore

Yazid Mahadi, Bank of Singapore

Bank of Singapore has seen increased flows into managed investment products. The fund selection team has introduced strategies like factor-tilted equities and Islamic fixed income for the Dubai market.

“So within the equities front, even within the region or certain countries, it’s moving away from just looking at large cap or market cap tilted type strategies, and focusing on factors such as the potential rotation into value or small- and mid-cap equities,” explained Yazid Mahadi, head of funds selection.

The Singaporean private bank is shifting from a product-led to a more portfolio-based approach, either through advisory or discretionary. “Different markets have different tilts or preferences toward various asset classes. The whole idea is to adopt a portfolio-based approach with different building blocks of solutions that can help express and benefit from these opportunities,” said Mahadi, adding that the bank “has seen some interest in our Indian equity solutions as well.”

In the past year, clients have shown increased interest in private credit funds due to semi-liquid solutions. Mahadi also finds aspects of impact investing interesting, particularly in private equity, infrastructure, and private debt.

On the alternatives front, the bank is seeking opportunities within the hedge fund space, while for the traditional mutual funds platform, they are looking for potential replacements for their existing products. “This includes exploring multi-sector credit strategies in fixed income and more systematic-driven strategies in equities.”

Pictet Wealth Management

Karen Tan, Pictet WM

Pictet is seeing renewed interest in income strategies with steady cash flow. The bank has also introduced more funds that are less correlated with broader markets, such as absolute return bonds, catastrophe bonds, and liquid alternatives.

“What’s interesting to note is that the first half of the year was dominated by the AI theme, the Magnificent Seven. However, in the second half, people are starting to question whether the market will broaden out,” pointed out Karen Tan, head of managed solutions.

“We’ve also observed that dividend players are making a comeback, as dividends have historically contributed to 40% of total returns. Therefore, they are another attractive income generation solution,” Tan.

Pictet started trimming its equity position in DPM portfolios back in June, taking profit on the first half of strong performances, and moved overweight on fixed income. For ultra high net worth clients, the bank typically recommends more than 30% in private assets, considering the illiquidity premium that can be endured over a longer time frame.

“We have various building blocks available on both our DPM and advisory sides, leading to an increase in [tailor-made mandate] requests and tapping into those building blocks,” Tan said.

Pictet is looking to onboard a US market fund given the broadening market positioning and performance trends. “We do see peak valuations in the US, so we are favouring small caps because it will tend to benefit in the declining rates environment as their funding cost goes lower.”