JP Morgan Private Bank seeks ESG, liquid alts funds

The firm's Asia head of investments explains where he is seeing appetite among clients, pointing to their rising awareness of socially responsible strategies.
JP Morgan Private Bank seeks ESG, liquid alts funds

With the concept of sustainable investing gaining traction among institutions in Asia, it was always likely to catch on more among the region’s wealthy individuals. JP Morgan Private Bank is looking to cater to this appetite by expanding its range of such products.

Christopher Blum, the firm’s Asia head of investments, told AsianInvestor: “We have been getting increased queries from clients on ESG [environmental, social and governance] themes such as water, as well as on the general implementation of the ESG framework in the investment process.”

Blum’s team is working with the bank globally to build a more complete product range in that space, mainly through managed investments such as mutual funds and exchange-traded funds. He did not give specific examples of the types of funds JP Morgan had added or was looking to put on its shelves, or to quantify what level of flows the firm had seen.

“Clients are increasingly focused on the impact of their investment decisions,” said Blum. The bank has seen a pick-up in interest among clients in ESG factors over the past three years or so, he noted. “Especially in China, which is the fastest growing market for sustainable investing in Asia ex-Japan.”

There are signs that this trend is starting to take hold in the mutual fund space. Last month, for instance, it emerged that Malaysia’s Securities Commission is developing a framework for socially responsible investment funds.

Looking at liquid alternatives 

Meanwhile, another area where JP Morgan PB is keen to develop its offering is in liquid alternatives mutual funds, said Blum. The bank is looking to add such products – which replicate hedge fund strategies, but with the benefit of daily liquidity – both those run in-house and by third-party asset managers.

The firm did not provide an idea of the level of flows it was seeing or point to specific strategies it was considering.

Demand for liquid alternatives globally was positive in the second quarter of last year, but had fallen compared to the previous quarter, according to Wilshire Alternatives. The liquid alternatives universe tracked by the consultancy saw a $3.1 billion rise in its AUM during the second quarter, well down from the $17.6 billion increase seen during the first quarter, according to data it published last week.

Blum said private market investments were also still gaining traction among clients. He said that on the one hand investors were willing “to take risk in tech-focused private equity, but at the same time they also want to complement that with short-duration fixed income strategies”.

Ultimately, while passive products might be gaining ground in other parts of the world, added Blum, the hunt for alpha still dominates the mindset of Asian investors. “I don’t often meet clients who say they want to see more passive ideas.”

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