Pictet Wealth Management is currently working on an Asia-focused ESG solution for clients, according to David Gaud, the firm’s Singapore-based Asia head of discretionary portfolio management and chief investment officer.
“One interesting development is ESG investing, and we think it is going to be big next year,” he said during a media briefing in Hong Kong.
The firm runs a global multi-asset responsible investment offering mandate, which is available to Asia-based clients.
“We are now working on a multi-asset Asia offering,” he said.
A change of mind?
Initially, the firm had no plans to offer an ESG-focused mandate in Asia.
But now there is a trend among clients in the region to embed ESG factors in the management of their wealth, according to Gaud.
However, a survey of Hong Kong investors conducted earlier this year contradicts his view, finding that SAR investors have scant interest in ESG products for various reasons.
Moreover, private banks operating in Asia are at different stages when it comes to ESG integration into client portfolios.
Among those who were first movers is UBS Wealth Management. Since launch in 2017, Apac-sourced AUM for the firm’s sustainable cross-asset portfolio has reached at least $600m as of October.
Other banks, such as DBS Private Bank, have included ESG and sustainable products on their fund platform. DBS said it is in the process of exploring new ideas.
On the other hand, UOB Private Bank has yet to come up with an ESG strategy for wealth clients because the lack of a standardized ESG definition has become a challenge.
“The main challenge is the lack of consistency in what clients want from ESG investing and how fund managers define ESG,” Wong Meng Keet, Singapore-based head of managed product solutions at UOB PB, said previously.
More China A-shares
Separately, Pictet WM’s Gaud said that the firm has been investing more in China, particularly in the A-share market.
Gaud explained that the firm has treated China as a separate asset class from emerging markets.
“Our China and India allocations are no longer done through emerging market exposures and we have used external funds to have higher exposure to the markets.”
For its China A-share exposure, Pictet WM invests in a mutual fund that has 50% of its assets in A-shares and the other half in H-shares, Gaud said, but did not name the product.
“That means we are overweight A-shares compared to the MSCI China,” he added.
Despite a clear, consistent and concerning slowdown of China’s GDP growth, Gaud is positive on the Chinese economy and said the central bank has room to cut interest rates to spur growth.
“The People’s Bank of China has not done much yet, but they basically sent signals that they are willing to do so. That means they have the means to protect the economy if it slows down faster than expected.
“China is not going to save the emerging markets, but it can save itself.”