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The product gaps Citi Private Bank is looking to fill

The product gaps Citi Private Bank is looking to fill

 

Citi Private Bank is seeking investment ideas in the energy, mobility, financial, healthcare and consumption sectors. Julie Koo, head of sales at Citi Investment Management, Asia Pacific, sets the details. 

 

Q: Tell us about your role

A: I manage the Citi Investment Management product platform across Asia Pacific. Areas I cover include traditional investments, hedge funds, illiquid investments -- including private equity and real estate -- and discretionary portfolio management.

My team’s responsibilities are two-fold. One is to source and produce ideas that are derived from Citi Private Bank’s Global Investment Committee’s forward-looking investment views, and offer the kind of solutions that we feel would make sense for our clients in this region.

The second is to ensure that the products on our platform are well-understood and appropriately positioned, and that we closely monitor the performance of these investment offerings.

Q: What’s on your radar and what strategies have you added recently?

A: These are four key themes that we have been watching closely:

  • Continued expansion in markets despite current risks
  • Markets that are being discounted given current stress levels
  • Rising interest rates
  • Persistence of volatility

Some areas that we like very much include healthcare, where we see really strong growth prospects going forward.

We also see this sector being sheltered from geopolitical risks, including trade tariff talks. In this space, we have introduced investment solutions across the spectrum from early stage private equity funds to healthcare long/short funds and long-only funds in both global and specific areas such as China.

Other themes that we think are fairly resilient are domestic consumption growth and technology.

In technology, we like investment ideas that are positioned further down the supply chain as we see that those companies are not only feeding the technology sector but are more broadly driving growth in other key sectors, including the financial, healthcare and energy sectors.

As a result, we have on-boarded a number of funds that we feel are well-positioned to provide solutions in these areas.

Q: What are some product gaps that you are looking to fill?

A: We are continuously looking at good fixed income offerings. On the back of rising rates, clients are increasingly shifting their allocations from more fixed maturity type of investments to those with floating rates and shorter durations.

The other area where we continue to seek investment ideas is in today’s more 'modern world'. These ideas could be around disruption in the energy, mobility, financial, healthcare or consumption sectors.

In the past, investors tended to hold singular sector exposures, but increasingly there is a lot of overlap and interconnectivity between sectors.

A good example is the healthcare sector - today, there is a prominent and growing contribution in this sector that is being driven by technology and innovation.

Q: Given this year’s volatility, what are some investment calls that you have made that paid off?

A: We are seeing a revival of interest and support in hedge funds. Clients are seeing the role that hedge funds should be playing as part of a broader asset allocation in terms of providing a hedge in volatile market environments.

We already have a robust platform, but continue to look for new ideas.

We are seeing many of our clients increase their hedge fund allocation, and others who don’t already have that allocation are interested in starting a hedge fund program in this market environment.

Q: What is your outlook on US equities?

A: It has been exciting to watch. We think there is still some upside potential for US equity markets but see it is as being limited, particularly in the small cap area, where the growth has been even greater.

Q: How do you play the China story?

A: We believe in the long-term story of China. There are a number of things that we think will continue to support the overall China story.

Whether it’s the domestic consumption story, developments across sectors such as healthcare, continuous investments being made in technology and the development of supply chains down to semiconductors, there is a lot happening in China, and we like all of those stories.

We are cognizant that there will be bumps along the road, so we prioritize working with our clients to have them look beyond the short-term and focus on the overall growth story.

In terms of products, we offer a broad range of China solutions, both through our discretionary and third-party funds. We have also introduced a number of China-specific equity and fixed income solutions, as well as private equity offerings.

Q: Are thematics just a fad or do they have a solid investment thesis? What new themes have you added recently?

A: To me, the word ‘thematics’ implies that it is something niche and temporary. What we are really looking for are investment opportunities in the evolving world and how that is changing the investment opportunity landscape for investors.

The concepts of mobility, healthcare delivery, financials and cashless societies are some examples. The fact that there are well-diversified opportunity sets that sit behind these ongoing shifts is something we like and we will continue to explore.

Q: How has investor appetite for ESG been?

A: Europe seems to be ahead of Asia today in terms of institutions, private clients and family offices incorporating ESG into their investments, but there is definitely a growing interest in this region.

There has been a huge rise in ESG-specific products in the market. We are watching this space very closely and already have a broad range of ESG solutions on our investment platform.

Q: Best career advice

A: The best career advice I have ever been given was to ‘know what you know, and know what you don’t know’.  It’s important to continue to learn and surround yourself with people who know more than you in areas where your knowledge is limited.

This interview was first published in Citywire's 2018 Asia Fund Selector supplement.

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