Wealth management, added value, and investment intelligence
SHARE THIS ARTICLE
In an exclusive, Ali Janoudi, Head of Central and Eastern Europe, Middle East and Africa at UBS Global Wealth Management, sheds light on the crucial importance of information and consistency for a fund management house.
3 months ago
Wealth management clients today are increasingly demanding. They expect better service, greater transparency, and ever more comprehensive advice. As banks, we are under constant pressure to feed a pipeline of innovative products and solutions while offering superior service and added value—and at the same time ensuring effective use of our resources.
Intelligence provides added value
Focusing on financial and economic intelligence, and investing in gathering, assessing, and communicating this information adds value. Based on this, UBS has established the Chief Investment Office (CIO) which has over 200 analysts in 13 financial hubs globally, who research as well as oversee the investment policy and strategy for approximately $2.5 trillion in invested assets.
Consistency: A single investment view
The CIO creates a single investment view—the UBS House View—which forms a consistent basis for internal investment decisions and wealth management investment advice. Based on this, the CIO communicates investment opportunities and market risks to clients in regular, carefully managed and appropriate detail for every level—from affluent to UHNWIs, to corporates and bank customers of our global Bank for Banks service.
Global networks ensure breadth of vision
It is crucial for the CIO to be independent from revenue considerations in preparing its research. Our Global Investment Committee draws on in-house investment management and CIO experts.
And to ensure clarity and integrity, we use our global networks to connect with leading financial experts and top entrepreneurs, who we invite to challenge our UBS House View every month. We also run an Industry Leader Network, which brings together global industry leaders, mostly CEO’s and CFOs, to discuss industry trends, exchange experiences, as well as provide valuable input.
Investor sentiment survey
As part of UBS’ broader investment research, we also conduct regular Global Investor Sentiment surveys with wealthy clients, with a special focus on key markets. For our latest survey, from 3 June 3019 to 6 July 2019, we approached 3,899 investors and business owners with at least $1 million in investable assets.
The global sample was split across 17 markets: Brazil, China, Germany, Hong Kong, Indonesia, Italy, Japan, Malaysia, Mexico, the Philippines, Singapore, Switzerland, Taiwan, Thailand, the UAE, the UK and the US. The results showed that most investors are still optimistic about the economy. And even more so about their own region’s economy.
When the survey was conducted, 84 per cent of UAE investors reported being optimistic and looking to invest more. Overall, HNW individuals globally are staying invested and diversifying their portfolios across many markets, including the Middle East.
Their cash holdings, currently at 26 per cent, have been slightly increasing recently, which indicates that investors are looking for the right moment to deploy their liquidity.
Investors look for alternatives
As part of our global investor watch research we also deep dive into other investor views. Last year for example, we produced a ‘Sustainable Investing’ edition and found that 95 per cent of UAE investors are interested in sustainable investing, compared to the global average of 85 per cent.
Given that our clients are very passionate about philanthropy and sustainability—we proactively worked with the World Bank for solutions that fund social and economic development in disadvantaged markets. And we are helping clients achieve lasting impact while realising similar returns to traditional investments.
By engaging in sustainable investing, the investment community is helping all UN member states to achieve the UN’s 17 sustainable development goals by 2030. It’s an exciting thought that we now live in a world where everyone is a changemaker. At an organisational level, we are also advancing the scope of these investments through our Global Visionaries programme.
Under the programme, UBS board members for Global Visionaries select entrepreneurs who are working towards one or more of the UN goals, addressing societal issues, across diverse sectors such as health, education, equality and the environment. Many of our investors are proud that they are able to diversify their portfolios in such a way that reflects their personal values.
GCC trends and forecasts
Our GCC clients have shown a tendency to invest in real estate or stocks in their home markets, but also in investments that deliver fixed income. Yield is still top of mind for investors in the face of a likely more accommodative global liquidity environment.
We believe that the greater pick-up of emerging market bonds will also benefit fixed-income markets in the region in terms of price performance, but also in their primary market activity. Higher yielding instruments like those from Oman and Bahrain, will likely benefit most, followed by Saudi Arabia and the remaining GCC countries.
At the same time, local developments will crucially shape the outlook for the GCC markets. For example, we expect economic growth in the UAE to pick up by half a percentage point to three per cent this year, although greater global uncertainties need to be monitored closely.
The increased activity of GCC issuers in the primary market also raised interest from abroad, including from our clients in Russia, Central and Eastern Europe, Turkey, and Africa. Solid credit fundamentals and a favourable pricing compared to similarly rated peers make these bonds attractive for international investors.
Over a medium-term horizon, current efforts to further transition economic growth away from energy are paramount and a key for success is an effective public private partnership with the participation of domestic and foreign investors.
The region enjoys competitive advantages in many industries such as petrochemicals, energy and tourism, which can facilitate the transition and provide interesting investment opportunities for local and foreign investors alike.
Outlook for GCC investors
As an example of our UBS House View, within our latest outlook to GCC investors, we recommend staying invested in a welldiversified global portfolio. In our view, a low-for-longer interest rate environment will be supportive of carry trades and income enhancement strategies. Indeed, in a pre-emptive move, the US Federal Reserve recently cut the policy rate for the first time in a decade to cushion economic risks.
At the same time, we highlight that financial markets continue to expect further sizable easing, creating the risk that the Fed disappoints the market. For GCC investors, this can be an important consideration: A less-dovishthan-expected Fed would also mean less policy support for the GCC region (through the pegged exchange rate regime).
Moreover, the regional bond market hugely benefited from the global hunt for yield and from the inclusion into global benchmark indices for bond investors. While our fundamental view on GCC sovereign credit remains favourable, tighter valuation increasingly require investors to become more selective. Key risks to monitor are oil prices and trade tensions between the US and China and/or a more meaningful deceleration in global growth.
Information is key
Whatever the many geopolitical and economic uncertainties of our time, it is vital to maintain an optimistic yet realistic outlook. Intelligence, both the collection of valuable data and the application and sharing of this knowledge, remains at the core of successful wealth management. Adding value for clients and the bank itself.
CPI Financial was established in Dubai in 1999 to meet the needs of an ever-expanding financial community, offering a comprehensive portfolio of market-leading products and services tailor-made for the banking and financial services sectors.