UBP is taking a three-pronged approach to elevate its private market business as the Swiss bank seeks to deliver a high-quality experience in the increasingly competitive alternatives space, where virtually all private banks are now offering access to differentiated private market investments.
Under this approach, the pure-play private bank is targeting discretionary portfolio management (DPM) offerings, synergies between hedge fund and private market divisions, and outsourced CIO services.
Rather than promoting individual products to clients, the bank adopts a portfolio construction approach to private market investing, according to Brice Thionnet, global head of private markets at UBP.
"We are a stable and long-term institution. I think clients come to us with the goal of growing their wealth in a way that allows for it to be transferred to the next generation. To me, pushing individual products is a short-term adrenaline play – our way of managing assets is a more sustainable path."
Brice Thionnet
“We’re increasingly operating like a fine dining restaurant, where we select the ingredients, prepare everything ourselves, and aim to deliver a high-quality experience for the client,” he said.
DPM focus
With Asia’s wealth clients showing a rising appetite for private market investments, private banks are keen on adding various flavours of alternatives in their DPM offerings.
At UBP, while co-investment remains core to the bank’s DNA, Thionnet also highlighted DPM as a key growth area for private market investing. “This discretionary capital is important – both for clients and the bank itself. It lays the foundation for longer-term relationships,” he said.
The bank is encouraging clients to grant more unconstrained mandates, enabling the investment team to act promptly and effectively. “The more discretionary power we have, the better we can allocate and ultimately perform. That’s the direction we’re moving in.”
Thionnet acknowledged that transitioning clients from co-investment models to a full discretionary one is quite significant and requires a gradual approach. “It’s a big shift. You need to take them through it step by step. We often start with evergreen structures, which are easier for clients to understand,” he added.
He noted that current market volatility may prompt clients to reassess how they approach private investments. “It’ll be interesting to see how this volatility cycle influences behaviour – whether people begin redeeming or not. I think the fact that you have these quarterly redemption windows can help temper emotional reactivity,” he said.
Thionnet believes that the quarterly valuations and diversification inherent in evergreen structures will provide a buffer against market fluctuations. However, he cautioned that pressure could emerge on the credit side if redemption liquidity sleeves are invested in bonds that have lost value.
Whilst declining to provide specific figures, Thionnet said that client uptake of DPM is rising.
“Historically, our client bases have tended to lean more toward the advisory. They like to retain a degree of control. Although when it comes to achieving better performance and having more time to deploy capital, DPM is more interesting.”
Brice Thionnet
Hedge funds and private markets
UBP is also seeking to foster greater synergies between its private market investing and hedge fund divisions. “What we’re working on internally is bringing our private market practice and the hedge fund teams closer together – It’s all part of the broader alternatives area. And I believe we offer something there that the competitors don’t,” he said.
He added that the two teams have increased their collaboration. For instance, UBP held its inaugural Alternatives Forum in Dubai in May, offering clients integrated sessions on hedge funds and private markets. An Asia edition of the event will be held in June.
“Many competitors actually scaled back their hedge fund team. We’ve kept ours, and that continuity helps us to retain access to top-tier managers that others have lost.”
Brice Thionnet
The Swiss bank noted in its May house view that the ability of hedge funds to adjust exposures swiftly and take both long and short positions grants them a flexibility that traditional long-only strategies lack, which is a considerable advantage in today’s unpredictable markets.
We maintain our confidence in hedge funds’ ability to preserve capital. As performance dispersion increases, a sharp focus on both strategy and manager selection is more crucial than ever, the bank noted in its house view.
Private market-focused OCIO
Another area of opportunity is supporting EAMs and family offices through Outsourced Chief Investment Officer (OCIO) services, with a focus on private markets and alternatives.
This offering leverages the experience of 45 professionals within UBP’s private markets team and over 25 specialists on the hedge fund side. “It’s the kind of access that a typical single-family office simply cannot replicate. What we’re proposing to gatekeepers is not replace them, but to advise them on how to approach private markets more effectively,” Thionnet explained.
“These are the initiatives that we’re implementing, and we believe they’re a sound way to approach the market for the coming 18-24 months,” he concluded.
