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JULIUS BAER FEATUREinvestors, our shareholders, our owners,
that when they buy Julius Baer stock, they
just get wealth management. There is no
investment banking or commercial
banking risk whatsoever. We’ll continue
to stick to that plan.”
This pure-play strategy, Hodler notes,
diminishes the risk of conflicts of interest
- a fact he says distinguishes Julius Baer
from most other private banks.
“Our USP is that we have less conflict of
interest and can offer more holistic advice.
If you look at the portfolios of our clients,
maybe they’ll have five to ten percent
Julius Baer labelled products, because we
have some very good products ourselves,
but we will only put it into the portfolio of
the client if they’re better than other
products we look at,” he says.
“That’s exactly what I want to preserve,”
he adds. “Some of our smaller competitors
are also pure private wealth managers,
but locally. We have global reach.” a
While Julius Baer notes that
recommendations to clients
are unique and based on his or
her risk profi le and reference
currency, the bank says it
remains “generally
constructive” on the equity
market, as it believes its
fundamental picture looks
healthy, with a positive global
macroeconomic situation, a
good earning season and a
generally low level of interest rates.
“Investors looking to generate high single
digit target return will have no choice but to
turn to the equity market,” says Diego
Wuergler, Julius Baer’s head of investment
solutions and advisory Middle East. “Julius
Baer believes that such an investment
demand will continue, and no major rotation
[from equities to bonds] is forecasted as long
as rates remain below four percent.”
Wuergler adds that the generally cautious
mood of the average investor “bodes well for
the continuation of the equity bull market,
as it is known that markets climb a wall of
worries. We should fear excess optimism
and euphoria, such as in 2000 or 2007, but
be happy about people being sceptics as bull
markets are built on investors’ cautiousness.”
From a sector perspective, Wuergler says
Julius Baer is fond of technology, fi nancial,
energy and industrial companies, while from
a regional perspective, the Eurozone remains
the banks preferred area. Within the emerging
markets segment, “Asia Consumption” is the
most compelling investment opportunity.”Wuergler notes that Julius Baer is
“more prudent” on the FI [fi nancial
institution] market, particularly its
riskier segments such as high yield
emerging markets where current
low credit spreads failed to
adequately compensate investors
for the risk they are taking.
“Therefore, we prefer a safe
approach focused on focused on
high quality [investment grade]
bonds and infl ation-adjusted
securities. Duration, which measures the
interest rates’ sensitivity, is kept rather low.”Investors versus emotions
Among the most signifi cant trends among
investors today, Wuergler says, is that their
mood is often driven by what they read or
watch in the news every day. “We are
bombarded on a daily basis with horror
stories such as trade war fears, nuclear war,
infl ation fears, data privacy issues breaking
Facebook’s business model, Trump’s tweets...”
he notes. “Investors overreact and get scared.
The fact is that the fi nancial markets are not
driven by these events. In the long term, they
focus on fundamentals and are driven more
by the very high levels of liquidity rather than
what Mr Trump says.”
Wuergler also downplays analysts who
predict that volatility will be a major trend of
2018, instead saying that short-term volatility
is the norm for fi nancial markets. “Julius Baer
believes that the current volatility is nothing
extraordinary and just opens attractive
investment opportunities,” he notes.The Julius Baer approach
How the bank believes you should invest your money this yearu Julius Baer is fond of companies in the tech, fi nancial and energy sectorsu Diego Wuergler,
head of ME Investment