the asian wealth management summit 2015 - ft live...the asian wealth management summit 2015 keynote...

For Professional Investors - November 4th 2015

The Asian Wealth Management Summit 2015Keynote Address

Ligia Torres - BNP Paribas Investment Partners - Head of APAC & Emerging Markets

2

A barbell investor……

“ On average, I feel just fine” with Aggressive investments cushioned by cash

How to define the Private Wealth Investor (Asian or otherwise)?

(*) 2012; Source: Mckinsey Global Private Banking Survey 2013, Capturing the new generation of clients

3

All Looking for the Right Risk / Return Balance

Source: Alan Welner/AP

4

All Looking for the Right Risk / Return Balance

Source: Alan Welner/AP

Low Yields

RegulationLiquidity

Stock market performance

Demographics

Correlation

Commodities

Volatility

Market efficiency

Fiscal adjustments

5

Empirical View of Mutual Fund Flows in the 21st Century

2004-2007 2008-2011 2012-2015 YTD

Source: Lipper, BNPP IP, 28/09/2015

Goldilock Years

Global Financial Crisis &

Quantitative Easing (QE)

The New Normal

Money Market

Equities

Bonds

Others*

Asset Allocation

> €4tn

~0.9tn

> €3tn

(*) Commodities, Currencies, Derivatives,

Real Estate and Specialty Funds.

6

0

1

2

3

4

5

6

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

2004-2007 2008-2011 2012-2015 YTD

Asset Trends and Drivers – Bonds

Source: Lipper, Datastream, BNPP IP, 30/09/2015

Bond flows

BOFA ML Euro Government Index, Average Yield-to-Redemption

Main Drivers

• Low interest rates

• Regulation

• Liquidity

4.9%

3.9%

2.6%

0.5%

€441bn

€735bn

€1,072bn

Rates Decline

7

0

1

2

3

4

5

6

7

0

20,000

40,000

60,000

80,000

100,000

120,000

2004-2007 2008-2011 2012-2015 YTD

Asset Trends and Drivers – High Yield

Main Drivers

• Spreads

• Interest rates

• Economic growth

High Yield flows

Spread 10Y US BBB Corporate vs. 10Y US Government Yield


Spreads Down

€4bn

€85bn

€96bn

1.50%

6.70%

2.07%

2.74%3.08%

8

0

50

100

150

200

250

300

350

400

450

0.0

200000.0

400000.0

600000.0

800000.0

1000000.0

1200000.0

1400000.0

1600000.0

2004-2007 2008-2011 2012-2015 YTD

Asset Trends and Drivers – Equities

Main Drivers

• Stock market performance

• Herd behaviour

• Economic growth

Equity flows

MSCI AC World EUR


Markets up

€1,379bn

€55bn

€785bn

Markets up

Markets down

9

Asset Trends and Drivers – Thematic Funds

Main Drivers

• Less geographical boundaries

• Long term decorrelation to

traditional assets


0

50

100

150

200

250

300

350

400

450

0

50,000

100,000

150,000

200,000

250,000

2004-2007 2008-2011 2012-2015 YTD

Equity flows

MSCI AC World EUR

Markets upMarkets up

Markets down€169bn

€73bn

€228bn

10

Emerging Markets out of favor since 4 years………….Still becoming quite cheap!

Main Drivers

• Commodity run is over

• Granular view

• Speed of adaptation


0

1000

2000

3000

4000

5000

6000

7000

8000

-50,000

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

2004-2007 2008-2011 2012-2015 YTD

Emerging markets equity flows

S&P GSCI Commodity Total Return Index

€430bn

€165bn

-€4bn

Commodities up

Commodities down0.60

0.70

0.80

0.90

1.00

1.10

Oct-05 Apr-07 Oct-08 Apr-10 Oct-11 Apr-13 Oct-14

EM vs Developed Markets (DM) Fwd P/E

0.60

0.70

0.80

0.90

1.00

1.10

1.20

Oct-05 Apr-07 Oct-08 Apr-10 Oct-11 Apr-13 Oct-14

EM Asia vs Developed Markets (DM) Fwd P/E

11

Asset Trends and Drivers – Multi-Asset Solutions

Main Drivers

• Regulations


• High volatility


0

1

2

3

4

5

6

2004-2007 2008-2011 2012-2015 YTD

MAS flows

BOFA ML Euro Government Index, Average Yield-to-Redemption

Rates Decline

4.9%

3.9%

2.6%

0.5%

€1,132bn

€107bn

€1,014bn

For illustrative purposes only

Source: BNP Paribas Investment Partners

1

2

Return

Risk

Improvement in overall risk-return trade-off through diversification

5%

6%

7%

8%

9%

10%

4% 6% 8% 10% 12% 14% 16% 18% 20%

12

1315 16

1315

18 1719

21

25 25

2%3%

4%

4%

5%

5% 5%

7%

7%

7%

9%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Aug-15

Main Drivers

• Low returns (fee sensitivity)

• Market efficiency and liquidity

Asset Trends and Drivers – Active vs. Passive

Sources: Datastream, Lipper, http://www.etfgi.com/, 01/10/2015

Global Exchange Traded Fund (ETF) AuMs

Global ETFs expressed as a percentage of Mutual Fund AuMs

Mutual Fund AuMs as per Lipper Data Base

AuMs in €tn

0.3

0.50.6

0.5

0.7

1.0 1.0

1.4

1.7

1.92.6

13

750,000

1,250,000

1,750,000

2,250,000

2,750,000

3,250,000

3,750,000

4,250,000

4,750,000

100

110

120

130

140

150

160

Fed QE1

Fed QE3

Fed QE2

Main Drivers

• Fed Easing

• Market inefficiencies

• Absolute return

Asset Trends and Drivers – Liquid Alternatives

Source: SS&C, Datastream, 01/10/2015

US Fed total assets

US Fed Quantitative Easing

Net cumulative Hedge Fund Flows as a % of AuM

146%

105%

150%

$0.9tn

$2.2tn

$2.9tn

$4.5tn

14

Alternatives: a Growing Segment fueled by High-Net-Worth Individuals

Source: McKinsey & Company – The Trillion-Dollar Convergence: Capturing the Next Wave of Growth in Alternative Investments

Pensions CorporatesInsur-ance SWF

Endowments & Foundations HNWI

TOTAL AuMs in $tn: ~2.0 ~0.7 ~0.6 ~0.4 ~0.9 ~2.6

Large

Mid-sized

Small

>10% 5-10% <5%

Net Flows, 2013-2017Segment’s projected

growth

2013 Alternatives AuM by Segment

15

Asset Trends and Drivers

Thematic Funds

Main Drivers

• Less geographical boundaries

• Long term decorrelation to

traditional assets

Emerging Markets

Main Drivers

• Commodity run is over

• Granular view

• Speed of adaptation

Multi-Asset Solutions

Main Drivers

• Regulations


• High volatility

Active vs. Passive

Main Drivers

• Low returns (fee sensitivity)

• Market efficiency and liquidity

Liquid Alternatives

Main Drivers

• Fed easing

• Market inefficiencies

• Absolute return

Bonds

Main Drivers


• Regulation

• Liquidity

Equities

Main Drivers

• Stock market performance

• Herd behaviour

• Economic growth

High Yield

Main Drivers

• Spreads

• Interest rates

• Economic growth

?

?

? ?

Illiquid Alternatives

Main Drivers

• Regulations

• Volatility & inflation

• Demographics

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

Alternatives

Thematic Funds

Multi-Asset Solutions

17

…..but there is lot more that will influence our industry!

Ecology Technology Internet

Demography Commodities Big Data

• Climate change

• Water / Air / Wood / Soil

• Robotics

• Nano technologies

• Driverless cars

• Online shopping / Banking / Piracy

• Sharing / shared economy

• Digital globalization

• Predictive patterns

• Privacy

• Alternative energies

• Electric cars

• Insulation technology / nano technologies

• Live sciences / Longevity

• Generation X

• Millennials Y

• Silent Generation Z

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 96002, a simplified joint stock company with a capital of 67,373,920 euros with its

registered office at 1, boulevard Haussmann 75009 Paris, France, RCS Paris 319 378 832. www.bnpparibas-ip.com.

** “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

the asian wealth management summit 2015 - ft live...the asian wealth management summit 2015 keynote...

Documents