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UOB Private Bank – Delivering Consistent Results for Clients
BY CRAFTING solutions tailored to their clients’ risk appetite and investment objectives, UOB Private Bank has consistently delivered results for its clients. Dr Neo Teng Hwee, Chief Investment Officer and Head of Investment Products and Solutions at UOB Private Bank, shares key insights into his team’s award-winning performance.
Can you give a sense of how UOB Private Bank has performed in terms of delivering returns to your clients?
Our approach to investment is long term and we manage our clients’ wealth as if it were our own. We also ensure that we invest based on our client’s risk-appetite and investment objectives. For example, for clients who seek high returns, we provide well-diversified and risk-managed wealth management solutions. To increase their investment returns, we also build into the solutions the ability for us to seize opportunities presented by market changes.
In the past three years, our investment returns have outperformed the market across all asset classes. Our discretionary offerings have also delivered competitive returns during this period.
What are your key advantages in a competitive investment advisory market?
UOB is an Asian-focused bank with a long heritage and strong retail banking, corporate banking and investment banking capabilities. These enable us to offer our private bank clients investment solutions that help them manage their needs, spanning their personal and family wealth to their businesses across Asia. In addition, UOB Private Bank’s open-architecture product platform enables us to source for and to provide not only in-house solutions but also the best external solutions for our clients.
Given the changing market environment, our response to investment opportunities needs to be both prompt and considered. For instance, our Discretionary Portfolio Management (DPM) investment committee meets frequently to review asset allocations in the mandates and to adjust them to capture opportunities in a timely manner.
We track the performance of all our investment recommendations across all asset classes to ensure that our clients receive value from the investment advice they receive from the bank.
The strong and steady growth of our private banking business indicates our clients’ confidence in the Bank and in our offerings. In 2017, assets under management of our DPM offerings tripled on a year-on-year basis.
In the current climate, what type of asset allocation is the bank advising?
We still like equities, especially in regions such as emerging markets and Asia. Our view is growth is expected to continue across various regions this year, providing the environment for corporate earnings to increase.
On the monetary policy front, the Federal Reserve (Fed) and other central banks are expected either to tighten their monetary policy or to stay on hold. A gradual tightening of monetary policy will be more easily absorbed by markets and as such, less likely to trigger sharp sell-offs. In our view, volatile episodes may present buying opportunities for investors.
We are underweight fixed income, especially the lower yielding government bond sector. However, some segments of the corporate bond market that will not be affected by rising interest rates may still be attractive.
We also like alternative investments including commodities which in our view can perform well and can be used for portfolio diversification.
What are the key risks on the horizon and what strategy has UOB adopted to mitigate these?
A key market risk is for inflation to rise higher than the Fed’s target. This may lead to the Fed accelerating rate hikes and may cause a sharp fall in the equities markets and a potential upward move in the US dollar (USD). A rise in the USD typically indicates a fall in financial asset prices especially in emerging markets.
To address this risk, our strategy is to have a diversified portfolio comprising quality assets with strong fundamentals. We also like structured solutions that can take advantage of the changing market environment and yet has a limit on downside risk or a fall in prices. For fixed income, we prefer segments that are more resilient to rising interest rates such as floating rate notes, convertible bonds and Treasury Inflation Protected Securities.
How does the private bank leverage on the broader UOB Group to generate superior returns?
UOB Group is very well established in Asia. We draw on our Group’s capabilities and network for deeper understanding and greater insight into the economies and business development in the region. Being connected to and entrenched in Asia, we are also in a strong position to recognise the investment opportunities in the region and to offer our clients a more extensive selection of Asian fixed income investments, such as Asian corporate bonds.