JP Morgan bond fund shines, UBS top dog in wealth
In April, AsianInvestor revealed the winners of its annual Asset Management Awards. The biggest prizes are the Marquee Awards, which go to the leading institutions across key areas of the investment industry.
Our decisions were based on a blend of quantitative and qualitative research, including feedback from third-party sources.
Today we explain how UBS Wealth Management continued to outdo its private banking rivals and JP Morgan Asset Management offered the most impressive retail product in a fiercely competitive field.
Private Bank of the Year
UBS Wealth Management
Asia Pacific’s largest private bank continued to impress during 2016 for the solidity of its services, combined with ongoing efforts to strengthen its already capabilities.
It did so during a slow start to 2016, in which the major correction of China’s stock market had lingered on high-net-worth individual sentiment across much of north Asia. However, the Swiss bank recognised that investment service improvement should not be affected by market cycles and continued aiming to expand its capabilities.
This helped it raise its game in several areas, including by obtaining a new Beijing branch licence, with another in the works for Shanghai this year. It also left it in fine shape once market confidence began to return, particularly following the election of Donald Trump as US president in November.
A major coup for UBS’s Asia private bank head Edmund Hon was the hire of Ravi Raju in January from Deutsche Wealth Management, a man largely credited with revitalising the German bank’s regional private wealth offering over the past decade.
The upshot of these developments was that UBS WM increased its Asia-Pacific assets under management by 12% to SFr285 billion during 2016, cementing its position as the biggest manager of wealth in the region.
Impressively, it has built its regional asset base over the past few years by about 40% while retaining almost the same number of relationship managers. Executives say that UBS typically loses less than 15% of a client’s invested assets if their bank RM leaves for another institution.
UBS has enjoyed strong retention rates in part because of its CIO View investment solutions platform, which makes many of its product suggestions in a simple manner. But it’s also down to the bank's success in building market share with existing clients. UBS prides itself on personalised touches such as helping favoured business clients meet prospective partners or find an investment in the US, for example, via its international business network.
With markets improving and reflating this year, the bank looks well placed to continue building its client asset base.
Best Retail Product
JP Morgan Asian Total Return Bond Fund
In one of the most competitive categories this year, the performance and market breakthrough of JP Morgan Asian Total Return Bond Fund were compelling.
In December 2015, the fund was approved by the China-Hong Kong mutual recognition of funds (MRF) scheme in the first batch of products under the northbound scheme. JP Morgan AM appeared to benefit from being an early mover.
The fund proceeded to raise $1.15 billion in net flows in 2016 to reach $3.36 billion by the year-end. The flows came mostly from China, where it took in $1 billion last year, representing 90% of net flows into all northbound funds under MRF scheme.
Launched in January 2005, the fund is one of the longest standing Asian bond strategies in the region. Not tied to a sector benchmark, it explores opportunities in a wide range of fixed income instruments covering sovereigns, corporate, convertibles, local rates and currencies. The fund has some flexibility in managing duration by taking short positions in US Treasury futures, making it defensive in a rising rate environment.
As US interest rates started a rising cycle at the end of 2016, the strategy has shortened its duration and added more credit and convertible bond exposure.
The fund has delivered an annualised net-of-fee return of 5.02%. Its return fell slightly to 3.88% in 2016, but its volatility fell to 3.18% last year from 7.89% since inception, and its Sharpe ratio improved to 1.22, from 0.64 at inception. That’s because the fund, managed by Stephen Chang, has become more conservative and stable in light of the highly volatile environment.
Stay tuned for more explanations this year's Marquee Award winners, and click here to learn why Citi was named the leading asset services provider and consumer bank.