We build investment portfolios that match our clients' goals and risk profile

Luc, we are living in extraordinary times. What are the current trends in discretionary portfolio management?

The current situation is unique in terms of both our professional and our private lives and we have organised ourselves and found new ways of doing things in response to these exceptional circumstances. We have kept in close contact with our clients throughout the crisis via the usual means (by making more phone calls) and digital solutions, with regular videoconferences for a wider audience, more frequent updates (newsflashes, market information) to provide responsive and proactive services and communications in line with the latest developments. Our close relationship with private bankers and our clients is an essential part of our service and is in some ways the core of our DNA.

Our clients are increasingly sophisticated in terms of their understanding of investment portfolios and their ability to make investment choices. Most of our clients have access to detailed information about the markets and specific investment opportunities. During the lockdown we made sure our clients received the information they needed, enhancing transparency and trust. However, the financial markets are complex and are harder to interpret when there is a major upset at a macro-economic level, like this year.

So, as I said earlier, we need to be more proactive and present so we can help our clients understand the situation based on facts, and provide some visibility regarding the impact in terms of their investments.

We also need to diversify assets in the mandates available, by adjusting our asset allocation and selection of investment vehicles to changes in the short and medium term investment scenario.   

What are the advantages of discretionary mandates for clients?
 

First, not all clients want or are able to spend the time and energy needed to follow the stock markets and do the work of a financial analyst. To limit investment risk and maximise potential returns on a portfolio, a lot of work is needed to seize the best investment opportunities and monitor risk at all times. Analysis, selection, trading, accounting, controls and communications are all important parts of portfolio management and they require time and expertise. Clients who delegate the management of their portfolio under a discretionary mandate free up their time and benefit from the services of a financial expert who will monitor their investments.

Second, discretionary portfolio management can allow clients to achieve specific goals, such as planning for their retirement, saving for an investment or establishing a source of revenue for everyday expenses. We offer a wide range of mandates to meet these goals.

What expertise does a portfolio manager bring to a DPM mandate?
 

Our teams are in constant touch with the markets. They are experts who can perform the necessary financial and non-financial diligence to limit risks. Over the years, we have developed a client-focused service model.

However, our portfolio managers need to have three key areas of expertise to be able to manage our clients' investment mandates:

1. Constructing a diversified portfolio based on our strategic asset allocation.

2. Selecting financial instruments in each asset class.

3. Lastly, and most importantly, monitoring the risks inherent to each portfolio, in particular volatility and liquidity risk.

As you can imagine, portfolio managers don't work on their own. They interact with different experts throughout the process, from the investment idea through to its execution in the client's mandate, which is a contractual agreement. Teamwork and solid processes are crucial.

Have you seen a rise in new types of assets or new priorities recently?
 

Our constant search for suitable investment vehicles (which is facilitated by the development of ETFs alongside direct investments and funds) means we are able to offer our clients an appropriate range of risk and return by investing in different asset classes and geographical areas.

Responsible and impact investing are certainly areas in which our clients want to see us being active and offering solutions. Whether they manage their own investments or delegate their portfolio management, more and more of our clients want their assets to be managed in line with their values, avoiding certain business sectors or companies. We have therefore increased our range of ESG (Environmental, Social and Governance) mandates to offer our clients solutions that better align their investments with their values.

The public health crisis has also emphasised the importance of technology and the need for responsiveness. These two factors are increasingly important in our everyday lives.

How do you work with your clients to ensure this alignment?
 

One of the main purposes of our portfolio management offering is to ensure that we build investment portfolios that match our clients' requirements and goals, as well as their risk profile and investment horizon. We and our clients' private bankers work closely with our clients to understand their objectives and the principles that matter to them. This close relationship and our detailed understanding allow us to better meet their needs. Our wide range of mandates includes appropriate solutions and bespoke services.

The discretionary portfolio mandate offering can be rounded out by advice and specific services if a client wishes to make investment decisions in an area he or she knows well, for example. Advisory Management can complement Discretionary Portfolio Management.