Jansen Phee, UBS Wealth Management
UBS Wealth Management is looking at adding more thematic or specialised China-focused products to its shelf, Phee told FSA.
The firm is also interested in products with a One Belt One Road theme, as well as quantitative solutions that assist in asset allocation and security selection decisions.
“We are trying to grow our China offerings by looking at sustainable investing themes in Chinese products [across asset classes],” he said.
Sustainable investing products, which include ESG and long-term theme funds, are increasingly in demand, he said.
“Clients are looking for long-term themes in terms of investing. A lot more clients want to express their social and environmental views through the investments that they make.”
Getting on board
UBS Wealth has around 700 funds on its global platform, which include both active and passive funds, according to Phee.
He explained that historical performance is only one factor that determines whether it will be put on the focus list.
“Ultimately, the performance of the fund is what matters to clients. However, what is more important for us is what is driving that good performance. When we select a fund, qualitative factors are more important than quantitative factors.”
Qualitative factors include having a solid and consistent investment process, good risk management process and alignment of performance with the product’s investment philosophy.
Another qualitative factor is having an experienced investment team, Phee said, adding that a large team does not necessarily mean a good team.
“If you have five good analysts as opposed to 10 average analysts, the team with five in our view would have a greater impact.”
The bank is also mindful of fees a fund house is charging.
“We want to ensure that whatever fund we choose charges fees appropriately. Appropriately doesn’t mean cheap, it means that the fees should be commensurate with the kind of returns that we expect to see from the fund.
“If the fund charges higher fees [than the peer median], we would expect the performance to be significantly better to compensate for that.”
After-sales service is also crucial, as it is a reflection of how committed the fund house is to a product. “We expect the fund house to be prompt and transparent in its communications with us.”
The CIO’s call
The bank has 10-15 funds on the focus list that represent the main asset classes and key themes recommended by the firm’s global CIO, he said.
Therefore, getting on the list will depend on the CIO’s key calls. “If the CIO changes a view, then we would amend the funds on the list.”
He added that the CIO’s key calls will also include views on the market environment and outlook.
“So, if there is a view of overweight on Asia-Pacific equities, that is where we would then present what the best fund is to best represent this view. For example, in a late-stage market rally, we typically prefer funds with a quality bias.
“There is no point putting an Asian growth fund on the list if the call is for a value-bias market environment. But that doesn’t mean we don’t like the Asian growth fund. It’s just that it doesn’t reflect what the CIO is calling right now.”
The focus list is reviewed on a monthly basis. Changes are not made unless the CIO changes his views. The fund selection team in Asia, which Phee heads, is responsible for recommending Asia-focused products in terms of what would be the most appropriate strategies to play during a given market environment.
The focus list is mostly used for UBS Wealth’s general advisory business, as opposed to its discretionary and contracted advisory business.
Under contracted advisory, clients themselves will decide on executing a recommendation made by the bank, he explained, adding that the clients pay an annual flat fee, as opposed to general advisory, where the bank charges per transaction.
Although the broad asset allocation calls for all three businesses will be the same, contracted advisory is more granular in terms of sub-asset class representation, just like discretionary, he added.