Increasing market volatility and economic uncertainty have driven private banking clients to slow down new investments into discretionary mandates and accelerate diversification, according to HSBC’s Lina Lim in a conversation with finews.asia.

A downturn in global markets, the economy and general sentiments have led investors in Asia to seek more defensive positioning, including in discretionary mandates at private banks, according to Lina Lim, HSBC’s regional head of discretionary and funds, investments & wealth solutions, APAC.

But while this could hit asset growth, the upside has been an opportunity for HSBC to rebalance both investor asset allocation as well as leverage the British private bank’s rejigged product platform. 

«More recently, we've observed that our discretionary portfolio management (DPM) flows are in line with the industry. With increasing market volatility, growth momentum has slowed across the board,» said Lim in a recent conversation with finews.asia without disclosing specific figures. «But there are silver linings that come with greater investor defensiveness.»

Silver Linings

According to Lim, HSBC has been expanding the range of DPM solutions on its product shelf over the last five years. While it has been traditionally focused on fixed income mandates due to investor demand in a low-interest rate environment, it gradually broadened regional coverage to include global multi-asset mandates as well as single-asset-class mandates for equities.

Since 2021, the bank has also seen more interest in core multi-asset solutions with an allocation to alternatives, which are managed by in-house partner HSBC Asset Management, to withstand potential downside in portfolios. And more recently, it launched a mandate focused on a metaverse strategy to capture thematic investor demand for long-term trends.

«In hindsight, this ‘broadening’ has proven a good move for managing long-term portfolios due to the increasing need to diversify,» Lim added.

Next Generation Clients

In addition to broadening its product shelf, HSBC has also increased its focus over the last two years on next generation clients which the bank has characterized as being more hands-on in portfolio construction. To enable younger investors to test the waters in discretionary mandates, HSBC launched a unitized DPM solution with a much lower minimum investment amount of $200,000. 

And to capture the growing demand for sustainable investing from this segment and more, the bank also recently partnered with Lombard Odier to launch a bespoke solution that focuses on a portfolio of high-conviction, mostly mid-large cap equities globally that are either enablers or promoters of biodiversity across industries. 

Mass Market Opportunities

On top of next generation clients, HSBC’s unitized DPM solution was launched with an eye on new market opportunities beyond just ultra-high net worth clients. 

«The industry is increasingly extending access to DPM solutions beyond ultra-high and high net worth clients,» Lim said. «The affluent-to-high net worth segment is an underserved space for which we are actively exploring opportunities.»