The Asian Wealth Management Summit 2015

Transcription

1 For Professional Investors - November 4 th 215 The Asian Wealth Management Summit 215 Keynote Address Ligia Torres - BNP Paribas Investment Partners - Head of APAC & Emerging Markets

2 2 How to define the Private Wealth Investor (Asian or otherwise)? A barbell investor On average, I feel just fine with Aggressive investments cushioned by cash (*) 212; Source: Mckinsey Global Private Banking Survey 213, Capturing the new generation of clients

3 Source: Alan Welner/AP 3 All Looking for the Right Risk / Return Balance

4 Source: Alan Welner/AP 4 All Looking for the Right Risk / Return Balance Low Yields Commodities Liquidity Regulation Correlation Demographics Stock market performance Fiscal adjustments Volatility Market efficiency

5 Source: Lipper, BNPP IP, 28/9/215 5 Empirical View of Mutual Fund Flows in the 21 st Century Goldilock Years > 4tn Global Financial Crisis & Quantitative Easing (QE) The New Normal > 3tn Money Market Equities ~.9tn Bonds Others* Asset Allocation (*) Commodities, Currencies, Derivatives, Real Estate and Specialty Funds YTD

6 Source: Lipper, Datastream, BNPP IP, 3/9/215 6 Asset Trends and Drivers Bonds Low interest rates Regulation Liquidity Rates Decline 1,2, 1,, 8, 3.9% 4.9% 735bn 1,72bn Bond flows BOFA ML Euro Government Index, Average Yield-to- Redemption 6, 4, 441bn 2.6% 3 2 2, YTD.5%

7 Source: Lipper, Datastream, BNPP IP, 3/9/215 7 Asset Trends and Drivers High Yield Spreads Interest rates Economic growth 12, 6.7% Spreads Down 7 1, 8, 85bn 96bn High Yield flows Spread 1Y US BBB Corporate vs. 1Y US Government Yield 6, 2.74% 3.8% 3 4, 2, 1.5% 2.7% 4bn YTD 2 1

8 Source: Lipper, Datastream, BNPP IP, 3/9/215 8 Asset Trends and Drivers Equities Stock market performance Herd behaviour Economic growth Markets up 1,379bn Markets up 45 4 Equity flows MSCI AC World EUR Markets down bn bn YTD 5

9 Source: Lipper, Datastream, BNPP IP, 3/9/215 9 Asset Trends and Drivers Thematic Funds Less geographical boundaries Long term decorrelation to traditional assets 25, Markets up Markets up 228bn 45 4 Equity flows MSCI AC World EUR 2, 169bn Markets down , 25 1, 73bn , YTD

10 Source: Lipper, Datastream, BNPP IP, 3/9/215 1 Emerging Markets out of favor since 4 years.still becoming quite cheap! Commodity run is over Granular view Speed of adaptation EM vs Developed Markets (DM) Fwd P/E Emerging markets equity flows.9 5, 45, 4, 35, Commodities up 43bn Commodities down S&P GSCI Commodity Total Return Index Oct-5 Apr-7 Oct-8 Apr-1 Oct-11 Apr-13 Oct-14 3, 25, 2, 15, 165bn EM Asia vs Developed Markets (DM) Fwd P/E 1, 5, - 4bn , YTD.6 Oct-5 Apr-7 Oct-8 Apr-1 Oct-11 Apr-13 Oct-14

11 Source: Lipper, Datastream, BNPP IP, 3/9/ Asset Trends and Drivers Multi-Asset Solutions Regulations Low interest rates High volatility MAS flows BOFA ML Euro Government Index, Average Yield-to- Redemption 1,132bn Rates Decline 6 4.9% 1,14bn 5 Improvement in overall risk-return trade-off through diversification 3.9% 4 1% 9% 1 2.6% 3 2 Return 8% 7% 2 6% 17bn YTD.5% 1 5% 4% 6% 8% 1% 12% 14% 16% 18% 2% Risk For illustrative purposes only Source: BNP Paribas Investment Partners

12 Sources: Datastream, Lipper, 1/1/ ,, Asset Trends and Drivers Active vs. Passive Low returns (fee sensitivity) Market efficiency and liquidity AuMs in tn % 1% 9% Global Exchange Traded Fund (ETF) AuMs Mutual Fund AuMs as per Lipper Data Base Global ETFs expressed as a percentage of Mutual Fund AuMs 25,, 2,, 15,, 1,, 5,,.3 2% % % % % % 5% % % 21 7% % 7% 6% 5% 4% 3% 2% 1% Aug-15 %

13 Source: SS&C, Datastream, 1/1/ Asset Trends and Drivers Liquid Alternatives Fed Easing Market inefficiencies Absolute return 4,75, 16 US Fed total assets Net cumulative Hedge Fund Flows as a % of AuM US Fed Quantitative Easing 4,25, 3,75, 146% Fed QE1 Fed QE2 15% $4.5tn 15 3,25, $2.9tn 14 2,75, 2,25, $2.2tn ,75, 1,25, 75, $.9tn 15% Fed QE3 11 1

14 Source: McKinsey & Company The Trillion-Dollar Convergence: Capturing the Next Wave of Growth in Alternative Investments 14 Alternatives: a Growing Segment fueled by High-Net-Worth Individuals 213 Alternatives AuM by Segment Pensions Corporates Insurance Segment s projected growth SWF Endowments Foundations & HNWI Net Flows, >1% 5-1% <5% Large Mid-sized Small TOTAL AuMs in $tn: ~2. ~.7 ~.6 ~.4 ~.9 ~2.6

15 15 Asset Trends and Drivers? Bonds Equities? High Yield Low interest rates Regulation Liquidity Stock market performance Herd behaviour Economic growth Spreads Interest rates Economic growth Thematic Funds? Emerging Markets Multi-Asset Solutions Less geographical boundaries Long term decorrelation to traditional assets Commodity run is over Granular view Speed of adaptation Regulations Low interest rates High volatility Active vs. Passive Low returns (fee sensitivity) Market efficiency and liquidity? Liquid Alternatives Fed easing Market inefficiencies Absolute return Illiquid Alternatives Regulations Volatility & inflation Demographics

16 16 A new kind of Barbell! Today s Barbelling is a way of thinking about risk management with the aim to control losses while providing levels of exposure Active vs. Passive Thematic Funds Multi-Asset Solutions Alternatives

17 17..but there is lot more that will influence our industry! Ecology Technology Internet Climate change Water / Air / Wood / Soil Robotics Nano technologies Driverless cars Online shopping / Banking / Piracy Sharing / shared economy Digital globalization Demography Commodities Big Data Live sciences / Longevity Generation X Millennials Y Silent Generation Z Alternative energies Electric cars Insulation technology / nano technologies Predictive patterns Privacy

18 18 Disclaimer This document is issued and has been prepared by BNP Paribas Asset Management S.A.S. (BNPP AM)* a member of BNP Paribas Investment Partners (BNPP IP)**. This document is produced for information purposes only and does not constitute: 1. an offer to buy nor a solicitation to sell, nor shall it form the basis of or be relied upon in connection with any contract or commitment whatsoever or 2. any investment advice. Opinions included in this document constitute the judgment of BNPP AM at the time specified and may be subject to change without notice. BNPP AM is not obliged to update or alter the information or opinions contained within this document. Investors should consult their own legal and tax advisors in respect of legal, accounting, domicile and tax advice prior to investing in the Financial Instrument(s) in order to make an independent determination of the suitability and consequences of an investment therein, if permitted. Please note that different types of investments, if contained within this document, involve varying degrees of risk and there can be no assurance that any specific investment may either be suitable, appropriate or profitable for a client or prospective client s investment portfolio. Given the economic and market risks, there can be no assurance that the Financial Instrument(s) will achieve its/their investment objectives. Returns may be affected by, amongst other things, investment strategies or objectives of the Financial Instrument(s) and material market and economic conditions, including interest rates, market terms and general market conditions. The different strategies applied to the Financial Instruments may have a significant effect on the results portrayed in this website. Past performance is not a guide to future performance and the value of the investments in Financial Instrument(s) may go down as well as up. Investors may not get back the amount they originally invested. The performance data, as applicable, reflected in this website, do not take into account the commissions, costs incurred on the issue and redemption and taxes. * BNPP AM is an investment manager registered with the Autorité des marchés financiers in France under number 962, a simplified joint stock company with a capital of 67,373,92 euros with its registered office at 1, boulevard Haussmann 759 Paris, France, RCS Paris ** BNP Paribas Investment Partners is the global brand name of the BNP Paribas group s asset management services. The individual asset management entities within BNP Paribas Investment Partners if specified herein, are specified for information only and do not necessarily carry on business in your jurisdiction. For further information, please contact your locally licensed Investment Partner