While cross-border wealth management has been exposed to a lot of criticism over the past years, it still offers globally orientated investors huge advantages, Alex Fung, CEO Vontobel Wealth Management Asia, writes.
By Alex Fung, CEO Vontobel Wealth Management, Asia
Diversification is one of the most efficient and at the same time most important ways to protect assets against wide fluctuations and losses.
This includes not only apportioning assets across different asset classes, regions, sectors and currencies, but also across different jurisdictions and banks. While so-called cross-border wealth management has been exposed to a lot of criticism over the past few years, it still offers globally orientated investors important advantages in terms of diversification and service.
At Vontobel we combine the local know-how and presence with first-class wealth management services from Switzerland.
Safeguarding Wealth
More and more Asian clients want to safeguard their wealth which they have earned in the last decades. Therefore we observe an increasing demand for diversified solutions. If we talk about diversification we classify three levels: asset, bank and jurisdiction diversification.
Investing assets that are widely diversified across different asset classes and regions so as to reduce a portfolio’s risks and volatility is considered the golden rule of investment. Under the motto of diversification, a targeted distribution of assets is carried out across different investment opportunities that are independent of each other. By taking into account the corresponding correlations, the risk-return profile of a portfolio can be improved.
Diversification across several regions reduces so-called «home bias», i.e. the tendency of investors to accord their own domestic markets disproportionately greater importance when investing. This diversification creates value-added, because the returns generated by securities from different countries are less strongly correlated with each other than those from the same country.
Additional Diversifying Across Jurisdictions and Banks
Global diversification does not have to be restricted to international investment instruments, but can also mean investing assets or portions of a portfolio outside of one’s home market and or local bank. This latter option, so-called «cross-border wealth management», allows international clients to invest part of their assets outside their domicile in another jurisdiction, and thus to diversify across jurisdictions (and also banks).
With international tax transparency and the imminent introduction of new global standards for the automatic exchange of information (AEA), this business model is clearly gaining in importance. For globally orientated investors, there are many legitimate reasons for maintaining an additional bank account in another jurisdiction that is stable and secure.
Meeting Country-Specific Client Requirements
At Vontobel, we consider the provision of cross-border wealth management services as one of our core competencies. Thanks to our size, ownership structure and solid capitalisation, we can offer our international clientele the security and stability they desire, and a comprehensive range of services.
Our wide range of actively managed portfolio management or investment advisory mandates allows our clients a choice of investment products tailored to their specific needs – globally diversified or focused on specific asset classes or regions.
Over several years, we have improved and developed our competence in global investing and diversification. In this regard, the expertise of our local specialists in numerous branch offices – like Hong Kong – is especially helpful, as they provide clients with Vontobel’s local know-how.
Alex Fung is the CEO of Vontobel Wealth Management Asia, based in Hong Kong.
