Unigestion Asia promotes unique strategy for Asian wealth management clientele

Nicholas Hulme, the Singapore based General Manager of Unigestion Asia and head of the firm’s business development for Asia and the region, met with Hubbis to explain why Unigestion’s strategy and its tailor made offerings are winning over Asia’s wealth management clients in increasing numbers.

Unigestion is a global asset management company with a 47-year history and with three offices in North America, one in the US, two in Canada, five offices in Europe and one in Singapore, where it has operated for the past decade. The firm is responsible for managing USD24.9 billion in client assets globally across four areas of expertise: equities, private equity, multi asset and alternatives.

“We have a rich history in asset management,” Hulme explains, “predominately building tailor-made mandates for client-specific solutions designed to resolve issues within portfolios. We have found that here in Asia there is strong demand for cross-asset solutions, by which we mean being able to invest all the way across the spectrum of asset classes and in alternative risk premia. The latter, ARP, has been designed as a solution to replicate the types of returns that a client might have historically found from hedge funds but where the returns post fees are no longer so appealingbut with daily liquidity, full transparency, at a lower cost.”

Hulme reports that the firm sees risk management as an enduring driver of long-term investment performance, and therefore Unigestion applyies a sharp risk lens to all its strategies. “Investment decision-makers, including in the wealth management arena, are facing an increasing number of challenges. Traditional investment assumptions no longer hold so true, there is an avalanche of new regulatory requirements and there is a multitude of investment constraints as well as increasing governance pressure.”

The firm’s website explains that, core to the company’s approach, is the philosophy that outperformance comes from superior risk management. “In the long term,” Hulme elucidates, “we believe markets reward those investors who focus on managing and anticipating risks rather than merely chasing returns. Risk contributions have a greater impact on performance than asset weight, and long-term returns are best achieved through downside protection. We also focus on rigorous portfolio construction and apply stringent capacity and liquidity management across all our portfolios.”

Unigestion therefore believes in partnering with investors to address these challenges for the long term. “Our philosophy is to understand client investor objectives in depth so that, using our risk management-driven approach, we can deliver solutions tailored to their specific needs,” he reports.

Hulme explains that the alternative risk premia strategy is designed to provide diversified returns, uncorrelated to equity and fixed income. “ARP was developed as an addition to a multi-asset or a balanced portfolio to reduce volatility and increase returns over the longer-term. For an investor to build the underlying risk premia by themselves is very complex and requires specialty expertise for the portfolio creation, hence clients warm to our expertise and tailored solutions.”

Hulme says that the firm has a team of around 13 experts managing the strategy, Joan Lee, Senior Portfolio Manager, was recently nominatednamed amongst the finalists at Investment Week’s Women in Investment Awards in the UK as for the fund manager of the year award.

Jerome Teiletche Head of Cross assets solutions and Olivier Blin Head of Systematic strategies who have been with Unigestion for four years running this ARP strategy and who were fulfilling a similar role elsewhere for roughly eight another four years beforehand.

“What is perhaps unique is that we do not run our ARP strategy on equal risk weightings,” he elucidates. “Instead, we manage the ARP aligned with a macro overview. While people will argue that risk premia are uncorrelated and therefore should be weighted equally, we maintain that some risk premia do not perform very well in specific environments, so being able to adjust the portfolio dynamically to manage the macro environment is, we believe, essential. Nobody else does thisit like us.”

In terms of returns, Hulme reports that the expectation is cash plus seven annually with a volatility of eight. “And it is daily liquid and 100% transparent,” he adds.

Unigestion has been in Singapore for around 10 years and Hulme has been located there since 2010 and has seen the staffing riseing to a 13-strong team todaycurrently. Asia-based target clients include large institutions, sovereign wealth funds, insurance companies, as well as private banks, ultra high-net-worth individuals (ultra-HNWIs), and distribution platforms. “ We are really actively building out our client base in the region,” Hulme reports, “including the wealth management sector, so multi-family offices and independent wealth managers are also in our focus.”

“The wealth management sector is currently highly receptive to the types of strategies that we have to offer,” he reports. “The sort of absolute return, cash plus seven or cash plus 4% type strategies that we run with a volatility of 8% or 5% respectively have great resonance with family offices, so we are expanding robustly in that area.”

“Some competitors do provide risk parity solutions across assets, with similar target returns cash+4%,” he explains, “but we take that one step further by adding a macro overview.  What this means is we look at the types of risks inherent in each asset class, we size their positions accordingly but we also overlay this strategy with a dynamic portfolio and an opportunistic portfolio. This particular strategy, our Navigator strategy is up 2.2% year-to-date in an environment where most assets have been negative, so it is well received. The strategy was up 10% last year.”