Teo Wei Zhen, Credit Suisse
Alternative fund solutions specialist, private banking, Asia Pacific
The first of 2020 has been a particularly disruptive market, yet we have seen most hedge fund strategies on our platform protecting capital well. Managers with dynamic approaches were able to actively reduce risk or implement bearish positioning and hedges, while long-short equity funds were able to produce significant alpha on both sides of the portfolio. We continue to favour such strategies going into H2.
We see the benefits of having both discretionary and quantitative approaches within client portfolios. In the current environment, we are particularly excited about structured credit and capital markets strategies which can offer risk/reward largely independent of market directionality.
We also like discretionary macro managers as they have the agility and can profit from trading opportunities around macroeconomic trends and political events.
Paul Tay, Raffles Family Office
Senior vice president of trading and advisory
We are both country and sector agnostic, hence we invest where we see value and alpha.
We are still cautiously bullish on equities for now given the backdrop of major monetary and fiscal stimulus across the board, while balancing the risks of geopolitical tensions and Covid-19 headwinds. Having said that, stock selection is crucial.
We strongly believe that the 5G digital transformation theme, especially the tech-driven online economy, will provide alpha returns. This new economy play will be an enduring trend and we prefer large cap, high quality stocks with solid fundamentals.
We will avoid sectors such as airlines and hospitality for now. These sectors will continue to face severe headwinds throughout this Covid-19 pandemic.
We believe the catalyst for sector rotation into laggards will only be happening when we see the availability of vaccine with successful mass production capabilities.
Jansen Phee, UBS Wealth Management
Head of funds investment solutions, Asia Pacific
I am interested in strategies focusing on long-term themes and innovation in changing human lives, such as health care or education. At the same time I am always on the lookout to strengthen our ESG shelf, especially in areas relating to Asian strategies such as Asia fixed income.
I don’t have a specific need for new quant funds currently as we do have an extensive fund offering which includes quant strategies.
Leslie Lim, Tsao Family Office
Investment director
There are two areas we will be focusing on in 2020’s second half.
The first is distressed funds. The pandemic has created massive economic upheavals across the world and lots of businesses will struggle in the ensuing global recession. This is particularly the case given we’ve had such a long period of economic expansion, where corporate leverage has been steadily rising. We expect distress to be an attractive strategy in the months and years ahead.
Another area we are looking at is impact bond funds. In keeping with the family values for being responsible investors, we are looking at funds that invest in green bonds, social bonds, and sustainable bonds.
Patrick Ho, HSBC Private Banking
Chief market strategist, North Asia
We focus on several themes for the global markets in the second half of 2020. Some of these themes are riding on the development of the new-economy sectors. We expect ecommerce and related sectors should continue to thrive despite of virus outbreak.
Technologies that enables work-from-anywhere, automation and communications, such as 5G and cloud technologies, should continue to see strong demand.
We have identified various investment products that can allow investors to gain exposure to these investment themes. Selected funds are certainly among the best solutions. We think some quant funds with good track record and well-established strategies could meet our investment criteria as well.
Youssry Henien, Windsor Family Office
Chairman
My focus areas for the rest of 2020 are:
- Long/short on US equities, and with caution due to the upcoming US elections
- Long USD, short EUR and GBP
- Increasing exposure to platinum
We are also increasing our exposure to distressed real estate opportunities with a focus on residential. With unemployment and mortgage delinquencies on the rise, this is signalling weakness in the housing market. There is only so much the government can do to prolong this mess, but at some point, it can be dangerous territory for homeowners.
I have never really been too fond of quants, perhaps it is my old-fashioned way of investing. They are known to be expensive for investors due to their high costs. I can only imagine how quant fund strategies have been undermined by Covid.
I would not include it as part of my portfolio yet. Having said that, I do believe there could be an opportunity in quantamental strategies in the near future.
Rishabh Saksena, Julius Baer
Head of investment specialists, Asia Pacific
For equities, we will continue our thematic approach to investing, to benefit from longer term secular trends. Our next generation themes such as digital health and cybersecurity will be supplemented by increased focus on sustainable investing.
Diversified fixed income strategies and cash alternatives will continue to find favour in a low interest rate environment, as will portfolio diversification via exposure to less correlated strategies in the alternatives space.
Haren Shah, Taurus Family Office
Managing director and head of investments
2020 has been an unprecedented period where we saw a bear and bull market in record time, within six months. In this period of the ‘new normal’, portfolio constructs will need to adapt to the ever changing dynamics of Covid-19 and the new economic normal.
As such, for the rest of 2020, investing is going to be more about managing risk and avoiding potential pitfalls. Even though financial assets have recovered most of its losses year-to-date, the large fiscal and monetary liquidity injections will create distortions in the capital markets.
Since we expect that market volatility will remain heightened and there is no clear timeframe to when the global economy will recover, we believe a combination of alternative funds which tends to be market neutral, would work well in such an environment.
A basket of such funds with strategies like global macro, technology, credit long/short and quant-based volatility targeting would work quite well to deliver decent returns while managing drawdowns.
Vincent Ng, Nomura
Head of investment products and solutions, Wealth Management, Asia ex-Japan
Cross asset income funds which can consistently generate positive returns when global real yields are low or negative, are attractive. Only a few quant funds are on our radar as the market is entering unprecedented territory, so the effectiveness of quant strategies is unknown as we cannot rely on back testing.
Aman Dhingra, UBP
Head of advisory Singapore
We continue to seek out managers that continue to demonstrate strong expertise in their given field, especially in areas dominated by strong structural trends which will determine competitive positioning in years to come
We have no specific bias against quant managers but in general we are looking for investments via high conviction, active managers. We believe risk management will have a key role to play this year and into next
Simon Godfrey, EFG Hong Kong
Head of products
We are constantly reviewing our product shelf to identify additional funds that may meet our clients’ investment needs, while we monitor those that are already in their portfolios for deviation from our expectations.
In that respect, we will continue to review the selection of funds in the main areas of client interest: US and global equities, Asia, China, sector themes and income strategies that maximise income distribution.
We do not specifically target any particular type of investment approach, as long as it delivers on our clients’ expectations.
Stanley Chan, Indosuez Wealth Management
Senior director, public markets solutions, asset management, markets, investments and structuring
Income, income and income! The income theme does not seem to go away in Asia even though we have just gone through a dramatic disruption in the investment market. Key is, as always, how to balance the yield target with the risk taken. We have recently rejected a few fund proposals because of the latter.
We also like quality across fixed income and equity funds. We do not want to over-expose our clients to high growth and high return funds only given the market has so far, rebounded so much and so fast.
We like downside protection and consistent returns. We are exploring new fund options to replace those “quality” funds that have under-delivered.
When selecting funds, we do not discriminate between quant and active fundamental investment strategies. We stick to our process in reviewing the firm, the team, the investment, the track record and how a fund may complement our existing offerings and client needs.
Teo Wei Zhen, Credit Suisse
Alternative fund solutions specialist, private banking, Asia Pacific
The first of 2020 has been a particularly disruptive market, yet we have seen most hedge fund strategies on our platform protecting capital well. Managers with dynamic approaches were able to actively reduce risk or implement bearish positioning and hedges, while long-short equity funds were able to produce significant alpha on both sides of the portfolio. We continue to favour such strategies going into H2.
We see the benefits of having both discretionary and quantitative approaches within client portfolios. In the current environment, we are particularly excited about structured credit and capital markets strategies which can offer risk/reward largely independent of market directionality.
We also like discretionary macro managers as they have the agility and can profit from trading opportunities around macroeconomic trends and political events.
Paul Tay, Raffles Family Office
Senior vice president of trading and advisory
We are both country and sector agnostic, hence we invest where we see value and alpha.
We are still cautiously bullish on equities for now given the backdrop of major monetary and fiscal stimulus across the board, while balancing the risks of geopolitical tensions and Covid-19 headwinds. Having said that, stock selection is crucial.
We strongly believe that the 5G digital transformation theme, especially the tech-driven online economy, will provide alpha returns. This new economy play will be an enduring trend and we prefer large cap, high quality stocks with solid fundamentals.
We will avoid sectors such as airlines and hospitality for now. These sectors will continue to face severe headwinds throughout this Covid-19 pandemic.
We believe the catalyst for sector rotation into laggards will only be happening when we see the availability of vaccine with successful mass production capabilities.
Jansen Phee, UBS Wealth Management
Head of funds investment solutions, Asia Pacific
I am interested in strategies focusing on long-term themes and innovation in changing human lives, such as health care or education. At the same time I am always on the lookout to strengthen our ESG shelf, especially in areas relating to Asian strategies such as Asia fixed income.
I don’t have a specific need for new quant funds currently as we do have an extensive fund offering which includes quant strategies.
Leslie Lim, Tsao Family Office
Investment director
There are two areas we will be focusing on in 2020’s second half.
The first is distressed funds. The pandemic has created massive economic upheavals across the world and lots of businesses will struggle in the ensuing global recession. This is particularly the case given we’ve had such a long period of economic expansion, where corporate leverage has been steadily rising. We expect distress to be an attractive strategy in the months and years ahead.
Another area we are looking at is impact bond funds. In keeping with the family values for being responsible investors, we are looking at funds that invest in green bonds, social bonds, and sustainable bonds.
Patrick Ho, HSBC Private Banking
Chief market strategist, North Asia
We focus on several themes for the global markets in the second half of 2020. Some of these themes are riding on the development of the new-economy sectors. We expect ecommerce and related sectors should continue to thrive despite of virus outbreak.
Technologies that enables work-from-anywhere, automation and communications, such as 5G and cloud technologies, should continue to see strong demand.
We have identified various investment products that can allow investors to gain exposure to these investment themes. Selected funds are certainly among the best solutions. We think some quant funds with good track record and well-established strategies could meet our investment criteria as well.
Youssry Henien, Windsor Family Office
Chairman
My focus areas for the rest of 2020 are:
- Long/short on US equities, and with caution due to the upcoming US elections
- Long USD, short EUR and GBP
- Increasing exposure to platinum
We are also increasing our exposure to distressed real estate opportunities with a focus on residential. With unemployment and mortgage delinquencies on the rise, this is signalling weakness in the housing market. There is only so much the government can do to prolong this mess, but at some point, it can be dangerous territory for homeowners.
I have never really been too fond of quants, perhaps it is my old-fashioned way of investing. They are known to be expensive for investors due to their high costs. I can only imagine how quant fund strategies have been undermined by Covid.
I would not include it as part of my portfolio yet. Having said that, I do believe there could be an opportunity in quantamental strategies in the near future.
Rishabh Saksena, Julius Baer
Head of investment specialists, Asia Pacific
For equities, we will continue our thematic approach to investing, to benefit from longer term secular trends. Our next generation themes such as digital health and cybersecurity will be supplemented by increased focus on sustainable investing.
Diversified fixed income strategies and cash alternatives will continue to find favour in a low interest rate environment, as will portfolio diversification via exposure to less correlated strategies in the alternatives space.
Haren Shah, Taurus Family Office
Managing director and head of investments
2020 has been an unprecedented period where we saw a bear and bull market in record time, within six months. In this period of the ‘new normal’, portfolio constructs will need to adapt to the ever changing dynamics of Covid-19 and the new economic normal.
As such, for the rest of 2020, investing is going to be more about managing risk and avoiding potential pitfalls. Even though financial assets have recovered most of its losses year-to-date, the large fiscal and monetary liquidity injections will create distortions in the capital markets.
Since we expect that market volatility will remain heightened and there is no clear timeframe to when the global economy will recover, we believe a combination of alternative funds which tends to be market neutral, would work well in such an environment.
A basket of such funds with strategies like global macro, technology, credit long/short and quant-based volatility targeting would work quite well to deliver decent returns while managing drawdowns.
Vincent Ng, Nomura
Head of investment products and solutions, Wealth Management, Asia ex-Japan
Cross asset income funds which can consistently generate positive returns when global real yields are low or negative, are attractive. Only a few quant funds are on our radar as the market is entering unprecedented territory, so the effectiveness of quant strategies is unknown as we cannot rely on back testing.
Aman Dhingra, UBP
Head of advisory Singapore
We continue to seek out managers that continue to demonstrate strong expertise in their given field, especially in areas dominated by strong structural trends which will determine competitive positioning in years to come
We have no specific bias against quant managers but in general we are looking for investments via high conviction, active managers. We believe risk management will have a key role to play this year and into next
Simon Godfrey, EFG Hong Kong
Head of products
We are constantly reviewing our product shelf to identify additional funds that may meet our clients’ investment needs, while we monitor those that are already in their portfolios for deviation from our expectations.
In that respect, we will continue to review the selection of funds in the main areas of client interest: US and global equities, Asia, China, sector themes and income strategies that maximise income distribution.
We do not specifically target any particular type of investment approach, as long as it delivers on our clients’ expectations.
Stanley Chan, Indosuez Wealth Management
Senior director, public markets solutions, asset management, markets, investments and structuring
Income, income and income! The income theme does not seem to go away in Asia even though we have just gone through a dramatic disruption in the investment market. Key is, as always, how to balance the yield target with the risk taken. We have recently rejected a few fund proposals because of the latter.
We also like quality across fixed income and equity funds. We do not want to over-expose our clients to high growth and high return funds only given the market has so far, rebounded so much and so fast.
We like downside protection and consistent returns. We are exploring new fund options to replace those “quality” funds that have under-delivered.
When selecting funds, we do not discriminate between quant and active fundamental investment strategies. We stick to our process in reviewing the firm, the team, the investment, the track record and how a fund may complement our existing offerings and client needs.
