How BNP Paribas Wealth Management selects funds

AsianInvestor spoke to Arnaud Tellier, regional head of investment services at one of Asia's biggest private banks, about product onboarding and industry consolidation.
How BNP Paribas Wealth Management selects funds

Arnaud Tellier is Asia head of investment services, a role that encompasses product distribution, fund advisory, discretionary portfolio management, fund distribution, wealth planning and philanthropy.

Based in Singapore, he oversees a team of 160 employees across Singapore, Hong Kong, Taiwan, India and China – the latter three have only onshore business.

Of the 145-strong product team across Hong Kong and Singapore, there are 15 people in discretionary portfolio management and six in funds advisory (three in each location). The latter team carries out local selection of long-only funds and provides advisory support to relationship managers.

Q  How do you work with the head office on fund selection?

We work closely with our head office. We have an authorised universe of more than 1,000 funds, from which we select 100 to 150 funds in Asia in line with our house view. Within this, we have 30 funds on our high-conviction list – these are the ones we are promoting to our clients based on our house view, the quality of the managers and the fund performance. We also have a good cross-section of funds coverage with 27 asset class categories and over 50 fund houses. There is one person in Asia who works with our head office in selecting alternative funds.

Q  How do you differentiate yourselves from other banks?

We are totally open architecture, though we have a specific relationship with our own internal firm. A lot of private banks work with similar asset managers. The differentiation comes from selecting the best funds that express our house view.

The due diligence and selection of our fund universe is initially done by Fund Quest Advisor, which has specialised in fund manager selection and monitoring since 1993. It has 32 investment professionals based in Paris, London and Singapore, of which 16 are fund analysts. Fund Quest Advisor is affiliated with BNP Paribas Group and has full independence and autonomy.

We also have a strict monitoring process for high-conviction funds. We review the recommended funds on a monthly basis. If any of these funds underperform for three consecutive quarters, they are placed on a watch list. If the underperformance continues for the next quarter, they are taken off our recommended list, and our bankers and clients will be informed. We always propose switch ideas, and clients are free to stay or sell.

Thus, we have a robust fund methodology for selection of funds, with strong performance of recommended funds and good follow up monitoring with innovative tools. For selection of alternative funds, we use BNP Paribas Capital Partners, an alternative investment specialist division under BNP Paribas Investment Partners.

Q  What’s your view on industry consolidation, and would BNP Paribas consider acquiring or being acquired?

We have been building our business through organic growth and we will continue to do so. I can’t comment about the firm’s plan in terms of acquisition, but we are working on our 2020 plan, and that is to grow organically.

All this consolidation does not mean the market is less competitive. Consolidation sees newcomers enter the market, whether they are global or regional players. Competition is as fierce as ever.

Industry consolidation will continue. If you want high-quality service, you need to have people, an efficient IT system and a robust control framework. And clearly if you are $10 billion to $20 billion in AUM, you cannot survive.

We are in the top tier in terms of asset size and therefore not part of the group of banks that have exited the region. [BNP declined to confirm its AUM in Asia but cited external sources saying that it has $60 billion in AUM.] We will focus on organic growth in the region, where wealth is growing. 

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