OCBC warming to Asian, European equities

Added 11th December 2015

OCBC’s wealth management group has recently changed its positioning on Asian equities, according to Ryan Sim, head of investments for group wealth management.

OCBC warming to Asian, European equities

The bank's wealth management unit in Singapore has moved Asian equities to a neutral.

Sim expects stabilisation in Asia, both emerging and developed markets, after a year of investor concerns over China’s slowing growth and EM currency sensitivity to a US interest rate hike.

“Since we have moved from being cautious to neutral for Asia, we are open to reviewing and adding on core strategies for this region," Sim said.

"We have not brought on a new Asian-centric fund for some time, so this is something that we would be looking into [moving into 2016] should there be better alternatives than what we already have on our shelf."

European equities are another area of interest and are among the bank's top selling products, he said.

“People are still looking for yield as the interest rate environment is quite low. We see a large chunk of our sales moving into yield-producing mixed and multi-asset funds"

Sim believes clients are underinvested in the region.

“[This is] mainly due to the positive outlook for the region and that investors have stayed out of the region before 2015. We see more investor interest in Europe this year, and the outlook remains positive moving into next year.”

Volatility concerns

OCBC has been cautious about bringing in new funds amid the global market volatility this summer, which was sparked by concerns over China. The bank is focused on managing and rebuilding investor confidence.

“Going to the market with many new funds at this time deviates from what we are trying to achieve. Our main aim now is to get people to stay invested,” Sim said.

During the third quarter, the OCBC team has on-boarded only one new fund, the Neuberger Berman US Long Short Equity Fund.

“We brought in the fund to fill a gap on our shelf. Also, we realised that the US market is reaching a point when it is no longer in a one-directional phase,” Sim said.

OCBC Bank’s wealth management division currently maintains 300 products on its shelf. Its wealth managers actively promote 70 of these funds, which make up the core offering.

Sim said that while the team’s current approach is working well, he is looking to onboard products aimed at mitigating volatility and expects a shift into yield-producing multi-asset funds. He also plans to develop the wealth group’s product shelf moving into 2016.

"Given the expected rising interest rate environment and volatility next year, unconstrained bond strategies and multi-asset strategies are among those of interest to us. People are still looking for yield as the interest rate environment is quite low."

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