Amid the constant hum of activity in the private-banking world, it can be easy to forget the importance of discretionary portfolio management.
DPM is a simple enough concept, allowing wealth managers to handle money on clients’ behalf. This gives the provider greater say in how to put that money to work, and it allows the client to get on with their lives, in the knowledge their assets are being safely managed within previously established risk parameters and investment criteria.
Few do this better today than Julius Baer, the world’s largest pure-play private bank by assets under management.
In its current strategic cycle, running for three years through 2025, the Zurich-based wealth-management institution – led by recently appointed chief executive Nic Dreckmann – has been busy driving digital change for the benefit of clients and rolling out new and improved products to meet customer demand.
A host of funds have been introduced to its DPM offering over the past year. Julius Baer’s Global Income Opportunities Fund, unveiled in May 2023, offers clients an attractive and stable level of income, while maintaining capital appreciation and diversifying income sources by capturing coupons, dividends and, indirectly, share buy-backs.
Its Equity India Fund, launched four months later, offers exposure to an actively managed portfolio of domestic India stocks, selected from the country’s top-250 companies by market value. The allure for clients of investing in a basket of the best 20 to 30 India-facing stocks, based on their strong management and business fundamentals, is of doubling their post-tax profit over a five-year period.
Transparency can help customers to better understand how Julius Baer builds and hones its DPM offerings. In November 2023, it published a brochure called ‘Asset allocation perspectives’, which explained how the Swiss lender manages money, and offered insight into its investment philosophy.
Judges cited its ‘strategic focus on aligning products with [its] investment philosophy, initiatives in digitalization, and introduction of new products’
This helps the reader see how Julius Baer builds portfolios and reacts to market shocks, such as by reallocating managed client capital to other funds, cash or new offerings.
In turn, this gives clients added transparency and sheds light on – to use bank’s words – the “often opaque world of discretionary portfolio management, by openly presenting our fundamental investment beliefs that influence everything we do when making investment decisions” on behalf of clients.
It also describes 'successful' as “a marathon, not a sprint”. That is correct: slow and steady nearly always wins the race. But customers want results, and Julius Baer delivers there too.
Its EUR Strategy Fund maintained its position in the top quartile of its peer group. Four of its rated inhouse funds boast a five-star rating from Morningstar. Assets under management inched higher in 2023, to SFr427 billion ($484 billion), with net new money – the lifeblood of the private banking industry – totalling SFr12.5 billion over the 12-month period, up 43%.
The judging panel lauded Julius Baer’s performance across DPM. They cited its “strategic focus on aligning products with [its] investment philosophy, initiatives in digitalization, and introduction of new products”. They also pointed to its “clear strengths in innovation and client-centric approaches”.