Senior investment heads from UBS Global Wealth Management (UBS GWM), Julius Baer and Pictet Wealth Management (Pictet WM) outlined their products and strategies for 4Q23 during Asian Private Banker‘s 10th Funds Selection Nexus (FSN) in Singapore this week.
Multi-asset strategies and alternatives will be a key focus as the next growth area amid valuation adjustments across different regions, according to the panellists.
Karen Tan, Pictet WM
“So, given a very challenging backdrop seen in the Asia credit market over the past few years, credit managers have also divested from China and have been looking into the Pacific region, like Australia and Japan, to look for other opportunities,” Karen Tan, head of investment solutions and managed solutions, Asia, at Pictet WM, shared during the panel discussion last Thursday.
“As an area, we need to build on alternatives – both in terms of private markets as well as hedge funds – so we did add some strategies, which could be, you know, macro hedge funds, or relative value strategies, multi-manager strategies, etc.,” shared Rishabh Saksena, head, investment specialists APAC, at Julius Baer.
Julius Baer also introduced a global income opportunities strategy, which is a mix of defensive equities – comprising roughly half the portfolio – and investment grade fixed income, Saksena added.
Less active as merger ongoing: UBS GWM
While for UBS GWM, the period has been relatively quiet in terms of new products.
Jansen Phee, UBS GWM
“I think this year has been a little bit more quiet for us in terms of new strategy additions to our UBS shelf. As we already started off with a large shelf, every year for us to find a new idea gets increasingly more difficult,” according to Jansen Phee, head of funds investment solutions, Asia Pacific, and head of global investment management, China, UBS GWM.
Phee added that the firm is not seeing significant appetite from clients on the equity side.
“One plus one is never two, so we are in the process of reviewing the Credit Suisse [products] shelf, in terms of what we can complement, what we can take from their shelf to complement our shelves,” he explained.
FOs prefer alts
But in order to preserve wealth and grow in a proper way, UBS GWM’s Phee noted that alternatives have seen a growth in interest from large family office clients.
“If you look at big family offices, there’s a huge debate, whether private markets or secondary markets provide more value or more opportunities. What we have seen is a lot of the big family offices expressing a preference to look into private deals,” he said.
Rishabh Saksena, Bank Julius Baer
“When we look at alternatives, which is an under penetration, it’s always a challenge to reflect these in client portfolios,” Saksena noted, who believes one can see private credit as part of one’s long-term fixed income exposure.
“So when we were looking at fixed income allocation, we could have a sleeve there, which is on the private markets or through private credit exposures. Yes, of course, the liquidity parameters differ,” Saksena continued.
Sponsored breakout sessions
Against a backdrop of extraordinary concentration in the US market, with the Mega Cap 8 representing 70% of the S&P 500’s performance in the first half of 2023, finding diversification in equities has become increasingly more important, Jonathan Tredgett, portfolio manager, Findlay Park, told delegates at the 10th Fund Selection Nexus. His session explored how better risk adjusted returns may be available to investors further down the market cap spectrum.
While investors have long relied on bonds and broadly syndicated loans to generate yield, the growing prominence of private credit is expanding the universe of income investing. That was the view of Alex Catterick, senior managing director, head of alternative investment solutions, Manulife Investment Management, and Jonathan Glass, managing director, business development, Marathon Asset Management. Private credit offers investors access to alternative yield and return sources, while reducing volatility.
Inflation and rising interest rates are challenging traditional diversification methods, necessitating novel strategies for optimal returns. As such, balancing an investment portfolio with flexibility to go where the best value lies across different asset classes can be helpful during uncertainty and volatility are the order of the day. Michael Dyer, multi asset and equities investment director and Pierre Chartres, fixed income investment director, M&G Investments, explored this theme.
Asia high yield offers much more than just Chinese property. And with relatively low default rates among corporates in the rest of the region, disciplined credit selectors can find attractive opportunities amid today’s market disruption via four key themes – the consumption-led recovery across Asia, the decarbonisation trend, extreme selectivity in Chinese property developers and companies with a strong liquidity backdrop. PineBridge Investments’ Kelvin Heng, portfolio manager and credit analyst, delved into this topic in a dedicated session.
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