As part of our series of exclusive gatekeeper interviews, FSA speaks with Yan Ting (YT) Kum, head of managed solutions advisory, North Asia at Union Bancaire Privée.

YT is head of managed solutions advisory, North Asia for Union Bancaire Privée. He is responsible for enhancing the bank’s fund offering and driving growth and penetration of managed funds in client portfolios in the region. He holds a master’s in international and public affairs from the University of Hong Kong and a master’s in cultural studies from Lingnan University. He also has a Bachelor of Business Administration from City University of Hong Kong and is a CFA and CAIA charter holder.

What attracted you to the wealth management industry?

It was more because of luck than a conscious decision. What attracted me is that you meet people from all walks of life, including within the wealth management industry as well as clients, ranging from family office gatekeepers to entrepreneurs. I once met an inspiring entrepreneur who had pivoted industries, not just once, but three or four times, successfully exiting before a crisis and engaging with a new business each time.

Secondly, we are dealing with investments, so it means you find out very quickly whether your investment case is working after making a decision, so it is a very interesting and challenging pursuit.
 

What lessons have you learnt from your work?

Human beings are very good at forgetting. We are taught to learn lessons from history, but people are more inclined to forget those lessons in roughly 10 years.

With every financial crisis there are so many lessons you can learn, but a few years later when people talk about investments, it seems they have already forgotten a lot of those lessons. This is why history repeats itself.

For example, I think risks involved in sophisticated and less transparent investments are always high. It does not mean they are always bad, but before making an investment one should study the inherent risks. It could be that the structure or mechanism appears to be complex or it is very difficult to study the underlying assets. As time passes, I’ve found that more investors begin to underestimate this risk.

What keeps you awake at night?

Fortunately, my sleep quality is ok. I credit this to having a methodological, well defined process in place. That doesn’t mean there are no incidents or when something very surprising happens there is no stress. But staying methodological and having a well-defined process in place will give you a very good anchor or sense of comfort for your clients.

When recommending an investment product, one should tell the client all possible scenarios. People might say in advisory you should focus more on the upside potential of an investment. To me, I am more like a 50-50 weight between the positive and negative, because I want clients to be equally informed about the worst scenario of an investment and what kind of risks are present to help them make an informed decision.

What strategies are you recommending to your clients?

Asset allocation is critical, it’s an integral part of the process. If you have a skeleton of your strategy asset allocation you should stick with it. However, I think now is a market for hedge funds. In the past, market volatility was low, so hedge funds couldn’t get many opportunities to capture alpha. But I think the low volatility environment has been over for a number of years. So we find that many global macro and equity long-short hedge funds are finding lots of opportunities to capture alpha.

People might have said we have been too positive on alternatives, but we’ve always had a strong hedge fund research focus. After 2015, private banks were less focused on hedge funds, whereas UBP maintained a commitment to hedge fund research and beefed up our team in 2020 acquiring the hedge fund team from GAM. There was a time when the conversation around hedge funds was more difficult, but the conversation has become much easier in recent years.

Another interesting area is systematic strategies. I think AI [artificial intelligence] is somewhat of a “liberation” for systematic strategies. They’ve been doing machine learning for decades, and with advancements in AI they can speed up their speed and efficiency by 10 or 100 times. It’s an important paradigm shift for systematic strategies and we have found some of the experienced strategies have improved their performance meaningfully. It is no coincidence that traditional asset managers are now heavily promoting their systematic strategies.

What types of funds have you been adding to the platform recently?

One area we are working on is finding strategies with good valuation discipline that can go through cycles and volatility. We recently onboarded an absolute return bond fund. This a strategy with very good valuation discipline and enough flexibility to invest through cycles and volatility.

Another area of focus is alternative sources of yield. We have recently onboarded two strategies with exposure to CLOs [collateralised loan obligations]: one dedicated strategy and one which invests in CLOs and other securitised credits. I think CLOs are becoming a more regulated instrument. If you are not going into the riskiest tranches or silos it provides a very good structural cushion for investors to harvest better yield compared to traditional high yield. But we are very selective in the managers that we pick.

What is the highlight of your career so far?

When I review my career over the past 20-odd years, the highlight is that I have made many friends in the industry. I have found that the majority of my teammates in my past jobs have become good friends. Your job and career are different stages of your life, but friendships can last forever.