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瑞联银行新闻报道 16.03.2018

UBP fund selection chief: regulation saved my job

UBP fund selection chief: regulation saved my job

Citywire Selector - Many see growing regulatory obligations as an administrative nuisance but Didier Chan-Voc-Chun says the mounting burden has revived the job of fund selection.

The 45-year-old head of multi-management and fund research oversees between CHF 5-10 billion in assets and leads a team of five fund selectors at Geneva group, Union Bancaire Privée. In the past decade, the role of fund selection has been called into question, he says, particularly with the rise of robo advisory. Whether investors really need an intermediary who selects funds is a more relevant question than ever before, Chan-Voc-Chun says.

To some degree, regulation has provided the answer. As the financial world is watched ever more closely, the regulator wants professionals who can ensure clients have the right products. For example, Chan-Voc-Chun says when he selects funds for his Singaporean client base, the market authority in Singapore wants a rigorous fund selection team in place. ‘My team is under scrutiny from that and no-one at UBP is allowed to promote or distribute a fund to clients if it’s not recommended by the selection team.

‘Our job is probably safe for another decade thanks to regulation,’

he says. Wealth managers may complain because many of them have access to clients and have an opinion about a certain fund or security, but they haven’t the authority to recommend those products because they haven’t done the necessary checks, he says. That person won’t have made sure the fund suits the client, by running through the full chain of analysis and you need someone to take responsibility of that, Chan- Voc-Chun adds. For those within his team, each analyst will assess between 100 and 120 funds and recommend 20 and 30.

Honesty pays

Despite his support for the overarching role of regulation, Chan-Voc-Chun says MiFID II saddled his team with a heavy administrative workload over the end of 2017 and the start of 2018. ‘We have gone through the sizeable task of making sure that our fund recommendation process answers all the requirements of MiFID II.’ Collecting all the relevant information from fund providers can be difficult, he says, as there are often resource and cost issues. ‘Generally the companies we deal with are quick to answer any requests but I am sometimes surprised by the lack of accuracy on some information.’ Quality of service is a big differentiator between asset managers for the team at UBP, particularly when it comes to accuracy. It is crucial that fund managers inform the UBP selection team about any significant structural changes to the management of a fund, particularly given the value Chan-Voc-Chun places on honesty. ‘I tend to give credit to what a manager tells me and it’s in their interest to tell me the truth. If they don’t, it gets out very quickly in one way or another. ‘For example, I hate finding out through the grapevine that a manager has left. I expect fund providers to be as transparent as they can regarding any changes to their investment teams and processes,’ he says.

The most important part of collecting information from fund providers is the due diligence, which requires correct feedback, he says. The fund selector looks for a manager who is able to deliver a good performance in the areas they require and who is able to repeat what he has done over time. The longer Chan-Voc-Chun is invested in a fund, the more information and reports he accumulates, which allows him to check whether what a manager told him five years ago holds true today.

‘When you start with a new manager, you ask for a good level of information, the better you know him, the more you invest with him,’

Let’s get to work

Chan-Voc-Chun is a busy man. By the time I get to speak to him at 11:30, he has already been through a morning of meetings. As head of multi-management, he sits on UBP’s global investment committee, which meets every month but also weekly for a half-hour call on Wednesday mornings at 9:30. After the weekly call about asset allocation and outlooks, it’s straight into an international call with his team, spread across offices in Geneva, Zurich, Hong Kong and Singapore. The global investment committee supplies him with a macro overview but also focuses at an asset allocation level. This information feeds through to his team and helps guide fund of funds positioning. The fund selection team gets plenty of freedom, he says, but it is important to check the positioning fits the group’s overall view. UBP was very long equities throughout 2017, but Chan-Voc-Chun says this has been trimmed to neutral for the time being as a result of the fourth quarter. Even so, he expects strong, synchronised global growth to continue in 2018 and is still banking on equities to drive total returns over the coming year.

On equities, the firm favours Japan, as earnings are improving and valuations look more compelling than other regions. Chan-Voc-Chun also has a preference for emerging markets as their respective economies continue to strengthen. One area he is watching closely is the tech sector which he says is now overvalued and difficult to buy into. Rewind one year, however, and it would have been easy to say it was overpriced then too, but the market enjoyed a good run in 2017. This shows it’s not just about the price but earnings as well, he says, and it is important to pay attention to a particular pocket that may be overvalued. Low rates and narrow spreads mean fixed income is no longer a straight game, Chan-Voc-Chun says, and you can’t simply invest in corporates or high yield and wait to carry that over the medium term. Instead, you need managers who are active, flexible and selective and who can make some relative value calls on a very long duration, he says. Reviewing the first few weeks of the year, he says:

‘It’s starting quite strongly so we need to check the market isn’t getting ahead of itself and that the risks are well diversified and well allocated.’

Chan-Voc-Chun says the biggest contributor to the team’s relative performance last year came from fund selection, as a return towards active managers clearly helped. ‘Last year saw a comeback for active management after a few years of passive domination. An environment of low volatility, low rates and tight spreads requires being more selective and is the perfect hunting ground for active managers to demonstrate their skills,’ he says. Manager turnover is not very high, though the UBP team will remove or replace a manager if they spot issues with its team, management or risk profile.

During the morning meeting with his team, Chan-Voc -Chun says he reminded everyone that half-convictions are not welcome in the portfolio. He wants full conviction. ‘If someone’s conviction on a fund falters, then we discuss it and take action. We don’t have a high turnover in our fund of funds lists as we usually take time to build trust and conviction on a manager. But we are not shy of taking action if a key person quits a fund or if there are major changes in the investment process that no longer fit our requirements.’ As team leader, Chan-Voc-Chun encourages selectors to follow their convictions but he makes sure they are all guided by a unifying process. ‘Each team member has lots of freedom to express their own views through the due diligence process but the framework remains the same for everyone. We all need to speak the same language,’ he says. Chan-Voc-Chun was pleased overall to congratulate his team last year. ‘The team did a pretty good job in 2017. We probably made a couple of mistakes and will make more, but we made more good decisions than poor ones. If we can keep that up, year in, year out, we will achieve our goal of delivering a good performance to our clients.’

Move on up

With a background in engineering and a talent for maths, Chan-Voc-Chun says he didn’t start out with a clear vision of his career. His move into asset management was kick-started in Paris at Paribas Asset Management where he secured an internship and eventually a job after finishing his masters. After a couple of years at the French group, he moved into the fund of funds team and in 2005 received a call from Fortis Investments with a job offer. Seizing the opportunity, he joined the firm as a fund selector for European equities and oversaw the management of European equity funds of funds. During his four-year stint at the company, he moved through the ranks from portfolio manager and analyst in the multi-management division to become a senior portfolio manager. This was before being appointed deputy CIO and then CIO by 2008, overseeing the multi-management team and business line.

During his time at Fortis, the fund selection team’s assets under management increased fivefold to €10 billion – a feat he modestly brushes off as being ‘quite a success’. By that point a former Fortis colleague approached him about a position at UBP. Again, he grasped the opportunity and was soon on a steep learning curve, he says. In 2011, he joined the Geneva-headquartered group as head of multi-management and fund research. ‘The job was very different from my previous one at Fortis Investments. My role there was to lead a large team selecting managers mostly for the management of funds of funds and institutional mandates. 'Manager selection remains the core of the job at UBP but the proximity to end-clients and their needs requires adjusting my mindset and the way I approach fund selection,’ he says. However, Chan-Voc-Chun says he didn’t land in completely unknown territory as he already knew several of his new team from previous jobs. When he first took the job at UBP, he was overseeing a team of four, two of whom are still at the firm: Jonathan Naegeli, who now sits in the Hong Kong office, and Nicolas Occhilupo, who works with Chan-Voc-Chun in Geneva. ‘The team was doing a good job here and I was really happy to find people who knew what they were talking about,’ Chan-Voc-Chun says. The fund selection head’s contribution to the existing process was to make sure the research was consistent across the team, he says, and that everyone had clear goals to aim for. ‘The team has been shaped over the years and I have had the opportunity to bring in more talent. I am quite proud of the team dynamics today. The company has become more global and the team is made up of different personalities and cultures.

'Everyone fosters teamwork, everyone is keen to learn and benefit from each other’s strengths, and we all enjoy coming into the office in the morning.’

Team trajectories

Over the last six years, Chan-Voc-Chun says the team has evolved a lot, particularly with UBP’s expansion into Asia. In April 2016, the Swiss group completed the purchase of Coutts International’s activities in Singapore and Hong Kong. Coutts is the international wealth management business of Royal Bank of Scotland, and its entities in Switzerland, Monaco and the Middle East became part of UBP in October 2015. As RBS shed its international operations to focus on its UK business, UBP in turn used them to internationalise its own efforts beyond its core market of Switzerland. At the time, UBP obtained licences from the Hong Kong Monetary Authority and the Securities and Futures Commission to complete the final stage of the purchase procedure. This allowed the private bank to offer its wealth management services to all clients in Asia in addition to its asset management activities.

UBP’s expansion provided the fund selection team with a chance to grow into Asia, so Chan-Voc-Chun sent teammate Jonathan Naegeli, who was based in the Geneva office, to Hong Kong. He says his team needed someone on the ground to extend their research on Asian bonds and fixed income pan-Asia and single country funds for the new needs of Asian clients. Naegeli has been able to pass on information about the latest trends in Hong Kong but has also taken the disciplined fund selection process he acquired in Switzerland to the office in Asia. Spotting further local opportunities, Chan-Voc-Chun also decided to keep on Jeremy Ching, who worked in Coutts’ fund selection team based in Singapore. This move into Asia has had far-reaching effects in many ways and Chan-Voc-Chun says growing a global team has changed not only its size but its role. ‘I have the same title, I’m the head of multi-management but my job has evolved and it’s not just one person that has changed it, I’ve been part of that change, the team has too. ‘I’ve challenged myself to move things to where they are today by taking and creating opportunities.’ This proactive approach to change mirrors the group’s founding principles of conviction and agility. ‘I embrace challenge though it might sometimes reduce my sleeping time,’ he says.

Throughout our conversation, I notice Chan-Voc-Chun’s repeated use of ‘quite’ as a prefix to any hint of his own success. Disarmingly modest, the head of fund selection’s unruffled and calm attitude reveals much of what makes him a strong and effective manager.

UBP Multi-management & fund research


Didier Chan Voc Chun
Head of Multi-management & Fund Research


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