South China Morning Post (05.2020) - How has a fast-growing private bank managed to gain the trust of Asia’s savvy high-net-worth clients in the fiercely competitive market that is Hong Kong?
UBP Hong Kong has reversed the practice favoured by many private banks that stipulate ever-increasing thresholds for DPM Bespoke service. Starting with a three million Swiss Franc equivalent (HK$24 million), the comparatively low threshold required for UBP's elite DPM service has proved attractive to the bank's ultra-high-net-worth (UHNW) and high-net-worth (HNW) individuals alike. At UBP, UHNW is defined as having upwards of 25 million Swiss Francs (HK$200 million) deposited with the bank. This clientele represents a significant portion of the bank’s AUM in Asia.
The DPM service represents an important first step for clients to understand the advantage of having something crafted specifically for them, as unique individuals. It is fairly common that a UHNW client does not want to have a mandate covering their full investment. Thus UBP will propose to the client a DPM solution for a fraction of the whole deposit, and then build the relationship from that starting point.
Eric Morin, CEO of UBP Hong Kong Branch and Head of North Asia, has a nuanced view of the fast developing Asian market, where wealth creation is the greatest in the world. Says the French national: “UBP in Asia manages a higher percentage of entrepreneurs than UBP Group as a whole.” He believes the bank’s fast decision-making process resonates well with its Asian clients.
Many of the bank's clients in Asia—savvy entrepreneurs who have accumulated wealth by running successful businesses, remain hands-on in their investment portfolios. UBP relishes its role in helping clients manage their wealth while allowing them to focus more on their businesses. Increasingly, Morin and his team see a growing sophistication in Asian clients’ investment needs.
“The bank has put in place a very strong risk management system, and the implementation of decisions to invest in the portfolio is controlled by a straightforward framework and is determined by the Global Investment Committee, a team of 14 seasoned investment specialists.”
Also viewed positively by its clients is the fact that UBP does not push investment products per se. Instead, the Bank offers a holistic approach to portfolio management for individual clients, out of which invest product decisions fall. This practice is quite different from most of the bank’s competitors.
For wealthy individuals and families, UBP may very well represent the best of both worlds. On the one hand, they can remain hands-on in the kinds of investment they know best. On the other hand, at a time when investment products are becoming increasingly sophisticated, savvy clients can also experience the crafted DPM solutions offered by UBP for a relatively small investment sum.
Founded in Geneva in 1969, Union Bancaire Privée (UBP) has maintained its presence in Asia for over two decades. More recently UBP has registered a whopping 122 per cent growth in assets under management (AUM) over the period 2015 to 2019— this according to private wealth management magazine Asian Private Banker. The latest annual figure shows yet again a sustained level of double-digit growth in revenues in Asia.
There is a broad range of tactical manoeuvres in the short-term investment environment that can be used to achieve long-term goals of asset protection and growth, notes Christine Ravioli, UBP Hong Kong’s Head of Discretionary Portfolio Management (DPM). These are attractive to many UBP clients.
“UBP started to look at asymmetry in investment early”
explains Ravioli. “In 2018, we started to switch long directional equities into hedge funds, more specifically long-biased long-short equity management.” As such, not only does the portfolio enjoy a certain rate of investment return, or alpha, but it also keeps some of the investment exposure, also known as beta, while benefitting from increasing downside protection.
Towards the end of that year, she adds, the team decided to take advantage of the low volatility environment by moving longpositioned equities into quality structured products, as they wished to make use of the instrument as early as possible for better cost effectiveness and payoffs.
The bank was able to build asymmetric exposure over a period of 18 months. By the second half of 2019 the team began to use options, as it prepared for a market correction. By February 2020, two thirds of the bank’s DPM equity exposure was covered in asymmetric solutions. As she takes a long-term view of protecting clients' assets, Ravioli stresses: “You have to build exposure over time, and you need to have your belief in terms of asset allocation. The greater the valuation of equities, the higher the possibility of a correction.”
In good and difficult times alike, the UBP investment team has proved its ability to deliver results thanks to the clever use of a combination of investment instruments. The agile movement in the sophisticated investment market represents a full-time job for Ravioli and her team. In March 2020 they rotated a big part of the asymmetric solutions into directional equities as equity valuations proved attractive again.
Ravioli is proud to add that the bank’s managed assets outperformed the peers in the first months of 2020, thanks to asymmetrical solutions. The Covid-19 pandemic may prove a global shock and a challenge for many investors but the bank's (DPM) team remains vigilant. The increasingly popular DPM boasts 200-plus investment specialists located across markets, covering a whole range of investment classes including fixed-income assets, equities, hedge funds, to name a few. In contrast to the advisory model, the DPM service allows an investor to give a mandate to the bank, which in turn makes investment decisions in line with the investor's risk appetite and preferences.
Ravioli believes post-Covid-19 investment will be best viewed as a recalibration of the current norm. “Asymmetry will remain,” she declares. “Being selective, and focusing on quality assets, including fixed-income assets, equities and funds, will prove its worth in asset management.”
Eric Morin
CEO UBP Hong Kong Branch and Head of North Asia
Christine Ravioli
Head of Discretionary Portfolio Management, UBP Hong Kong
