UBS Global Wealth Management (UBS GWM) boasts a global reach and breadth of coverage that sets it apart from many of its competitors, and it is widely viewed to have the largest assets under management in Asia Pacific.
“We have a global team including analysts across many locations and dedicated specialists by asset class with a devoted due diligence team here in the region,” Jansen Phee, head of funds investment solutions for Asia Pacific (Apac) at UBS GWM, told FSA in an exclusive interview.
All funds undergo rigorous evaluation as he and his team look beyond the surface to understand the risks and challenges for fund managers. “Clients expect income generation, positive returns that outperform benchmarks or ETFs, and uncorrelated performance with higher up-capture and lower down-capture,” said Phee (main picture).
They also look to reposition their portfolio and gain access to new ideas such as artificial intelligence or niche ideas such as India. “Process, people and risk underscore our fund selections,” said Phee.
Singapore-based Phee is responsible for UBS GWM’s fund business in Apac, chairs UBS’s Asia Pacific investment fund forum and is also a member of its global investment funds forum.
In a second role, Phee is also in charge of UBS GWM’s funds, alternatives, and wealth planning (life insurance and family trust) businesses in mainland China.
He has over 18 years of experience in investment advisory, discretionary management and research roles. Phee previously headed UBS’s discretionary fixed income and equity teams and was the head of the Singapore and Malaysia investment specialist team where he helped advise and structure investment solutions for clients. He also worked at BNP Paribas Wealth Management as the head of equities within discretionary portfolio management.
At UBS GWM, Phee and his team focus on qualitative factors over quantitative factors as he believes that qualitative factors drive future returns and funds cannot be selected based on a great historical track record alone.
“Choosing funds based on track record is akin to driving a car purely by looking at the rear-view mirror,” he said.
Phee also looks out for “sustainable solutions and content”, which is why UBS GWM does not have a separate selection for sustainable investing (SI) funds; it has SI criteria fully embedded in its selection process, with all potential funds going through the same process and given a SI score.
Yet, investors seem generally reluctant to move decisively out of the stable returns of cash, despite the apparent attractions of well-examined funds by many expert fund selectors.
Re-evaluate cash holdings
But UBS GWM’s CIO view is that investors should re-evaluate their cash holdings, progressively lock in yields, and ensure they are sufficiently invested and diversified.
“There is some resistance with cash rates still high currently, but there is increased willingness among clients to shift to bond funds, even if partially, as central banks worldwide start cutting rates,” said Phee.
Indeed, UBS GWM currently prefers fixed income strategies, especially high-quality investment grade bonds. It also sees opportunities in strategic exposure to technology stocks (primarily semiconductor companies) and in US small caps.
“We see significant opportunities in the fixed income market as we position for slowing economic growth and inflation with central banks transitioning from rate-hiking to rate cutting cycles,” said Phee, a graduate from the London School of Economics with honours in econometrics and mathematical economics.
“Our favourites are quality bonds, which offer potential capital gains if yields are to fall and can help diversify against equity market risk.”
“Choosing funds based on track record is akin to driving a car purely by looking at the rear-view mirror.”
In equities, Phee sees potential upside for the broad tech sector, and notes that “semiconductors are well positioned in the artificial intelligence value chain”.
Meanwhile, he believes current US small cap valuations are low, and falling interest rate expectations should create tailwinds for small cap stocks.
Asia offers best growth potential
Geographically, Apac remains the most important region globally, accounting for nearly half of global growth this year and next with the world’s three fastest growing economies – India, China, and Indonesia, according to Phee.
In fact, China equities are among UBS GWM’s CIO’s most favoured sectors and Phee encourages his clients to gain exposure to the country. He recommends a balanced barbell strategy between growth and defensive sectors.
“There are concrete signs that the Chinese economy and investor and consumer sentiments have improved, and there are more sustained inflows from foreign investors and fund managers,” he said.
Turning to broader risks, Phee pointed out that “given this is the year of elections especially with the US elections coming up, geopolitics and equity market volatility are common concerns”.
“For Asia, the outcome will affect the strength of the regional recovery and policy reaction. In equities, we recommend hedging to mitigate volatile markets and concerns around equity bubbles,” he said.
