How to get investors to diversify more is an area of mutual interest for fund managers and private banks globally, but is acutely felt in Asia.
Investors in this region, from institutional to individual, have a heavy home exposure bias in their portfolios, put variously at 80-90% by research houses.
At the same time, mutual fund penetration as a percentage of household financial assets remains in single digits.
What private banks say they would like to see more from fund houses is ideas to help them diversify their clients, and have fund firms demonstrate credibly the benefits of diversification.
Now, with no clear directional trend in the markets on the back of prolonged monetary easing from the US Federal Reserve, would seem like an opportunity, particularly if markets have reached an inflection point in fixed income.
Today AsianInvestor is set to host its second annual private banking roundtable with five leading private banks around Asia - Credit Agricole, Julius Baer, LGT Investment Management, Standard Chartered and UBS Wealth Management. Here we hope to explore the evolving relationship between private banks and asset managers in the region.
During last year’s roundtable discussion, which you can view by clicking here, we heard that private clients had rotated more into fixed income funds, although this was partly due to difficulty of access.
What emerged was the relationship between private banks and asset managers was improving. Many private banks moved to a guided architecture approach in which they engage fewer fund houses, but work with them more closely.
During this year’s roundtable we will examine the future of fixed income, emerging markets and the increasing use of alternatives among private client portfolios. We also want to learn whether the use of funds in wealthy client portfolios is changing.
The understanding is that high-net-worth individuals have become more receptive to diversification through a volatility-adjusted approach. But coming up with creative ways to manage volatility often means giving up some liquidity, which is a tough sell.
We will also explore the importance of brand recognition, of the need for product manufacturers to localise across Asian markets. And we want to understand better the role of boutique managers and what their value proposition is for private banks.
AsianInvestor will publish the roundtable in full in our forthcoming (November) magazine issue. We will reflect on key takeaways from the event for online readers.