HSBC to expand manufacturing of Asia wealth solutions

In anticipation of volatility across asset classes in 2011, HSBC Global Asset Management is moving to broaden its multi-asset capabilities in the region.
HSBC to expand manufacturing of Asia wealth solutions

HSBC Global Asset Management is striving to expand its manufacturing capabilities for wealth solutions, especially in the multi-asset segment as it eyes diversification as a counterbalance to anticipated volatility across asset classes.

It recently transferred Simona Paravani from London to Hong Kong as its global chief investment officer for wealth, the firm’s latest relocation to the region.

She oversees a global team of over 60 managing over $50 billion in assets, including the $7.2 billion World Selection series of portfolios offering diversified global exposure to a mix of asset classes and managers.

Paravani says that HSBC Global Asset Management is looking to build more Asia-centric solutions to cater for local needs as well as to ensure that the region has stronger representation in the firm’s overall global perspective.

“We want to expand in Asia, particularly our manufacturing capabilities in the area of wealth solutions,” says Paravani. “My move to Hong Kong was one step in that direction.”

Her team sources the firm’s multi-asset capabilities to fulfil balanced and segregated mandates featuring a variety of underlying assets and mutual funds. The book of business it serves includes the insurance, pensions and charitable sectors, as well as private and retail clients.

Seeking to expand its product suite in Asia to serve the region’s increasingly wealthy population is an obvious motivation, given the opportunities that presents in terms of savings and investments.

“And then there is the other side of the coin, which is that Asia – and I would say emerging markets more broadly – are likely to become more and more a key ingredient of solutions we are bringing to markets in other parts of the world,” she says. “This is why it is important to bridge that gap.”

As an Italian, Paravani reverts to type and uses a food analogy to elaborate. “To some extent, multi-asset is the assembly line, but there is a broader picture behind that,” she states.

“When we talk about solutions, a bit like cooking, there is an element of how you pick your ingredients and how you assemble them. More and more the idea is that you need to be assembling ingredients that are a mix of active and passive vehicles, both internally and externally managed, so you can cook the dish the client is asking for. So more expertise is going into how you mix the right ingredients.”

Asked if the firm planned to add more multi-manager types of solutions into the mix, she replies: “More likely than not, yes.”

The drive for diversification fits into the firm’s macroeconomic view. Generally it is constructive on risk assets given a backdrop of positive global growth and accommodative policies in developed markets, as well as relatively high corporate cash levels.

But with worries surrounding unemployment and high levels of household and government debt-to-GDP in developed markets, Paravani forecasts volatility across asset classes in 2011.

On a tactical basis, HSBC Global Asset Management prefers Japanese equities in the developed world – a market that Paravani notes was unloved in 2010.

In fact she views equities favourably in general. “With regard to the eurozone, if we start to see a credible resolution to the debt crisis, that is likely to have positive repercussions for eurozone assets, including equities,” she says.

Paravani is the latest senior internal transfer to Asia by HSBC Global Asset Management as it strives to ramp up its regional resources. Joanna Munro, who was until recently Paravani’s boss in London, is due to take up her role as the firm’s Asia-Pacific CEO this May.

At a group level, HSBC has moved the CEO’s principal office to Hong Kong, with Stuart Gulliver chairing his first group management board meeting as CEO in Hong Kong last month.

HSBC Global Asset Management has assets totalling $445 billion, including over $100 billion in emerging markets, as at September 30 last year.

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