Equities hog the limelight

Mirabaud Asset Management, the subsidiary of Mirabaud & Cie, banquiers privés, founded in Geneva in 1819, is regulated by the Dubai Financial Services Authority DFSA and considered to be a gateway for investors to the Middle East, India, Africa and Asia markets.

Strongly engaged in wealth management in the MENA region the private bank allows investors to enjoy the fruits of strong growth in regional markets through a variety of financial products. In this exclusive interview, Majid Hassan, Head of Asset Management, Mirabaud Middle East Limited explains how the bank is helping organizations and investors improve their asset management and affirms that equities remain the most preferred asset class amongst investors in the GCC.

 

What is your take on asset management in the UAE?

 

The UAE is in the enviable position of being courted by many of the world's largest and best known asset management firms and ‘boutique’ Asset Managers, such as Mirabaud Asset Management.

 

What my career has shown me, however, is that the quality of a relationship is particularly important in this part of the world and that fund selectors are most receptive to organizations that seek, first and foremost, to build lasting relationships with them. This, incidentally, is why I joined Mirabaud Asset Management: I was looking for a partner who understood the importance of building such long lasting mutually beneficial partnerships - when we started speaking, we immediately saw eye to eye.

 

How can organizations enhance their objectives through good asset management?

 

Good asset management is like a good suit: it is good if it fits you and suits your needs, even though it may not fit someone else. Organizations must first understand their objectives and then ensure their results are as close to the objectives as possible. Good asset management provides the guidance to our partners, sets the goals, expectations and the means to get there, then reviews objectives / goals continuously and provides information regarding performance.

 

How does Mirabaud Asset Management allow its clients to make asset management improvements?

 

We listen, first and foremost, and ask questions. This is a prerequisite for our advice and suggestions to be relevant to our clients as we believe that a portfolio that fits the clients' needs better is, in effect, a better portfolio for them.

The message we keep hearing from clients, from the very large SWFs to the local family offices, is that they require quality communication from their external managers. Smaller managers are more nimble and can make quicker decisions. This greater flexibility allows smaller managers to react better to change and new, potentially high yielding opportunities. The Region’s appetite for returns, as well as for capital preservation, means this is a significant selling point for a ‘boutique’ asset manager such as Mirabaud Asset Management.

 

What are the unique investment solutions that you are providing for investors?

 

We specialize in high conviction / unconstrained active management and focus on strategies where this approach can truly add value to investors within 3 asset classes: listed equities, fixed income and alternative investments – hedge fund strategies.

 

Some of the specific segments we offer are Swiss Equities (including Small and Mid-Caps), Spanish Equities, Emerging Market Equities and Global High Income Equities. We will also shortly be launching a European Small and Mid-Cap strategy.

 

In the fixed income space, we provide unique approaches to High Yield Bonds, to convertible bonds as well as to the flexible fixed income space as a whole.

 

Another area we excel in is the alternative space: we were one of the first investors in hedge funds in the early 1970s and one of our funds has now been running for over 40 years. We recently launched a fund of activist hedge funds that has gathered significant investor interest.

 

What are the top markets for investors at the moment?

 

Globally, equities remain popular, despite the recent volatility, given the high potential returns they provide, the low rates in fixed income and the risk of a future increase in rates – which, incidentally, are the reasons why a flexible approach to fixed income investing, such as the one we offer, is so popular with investors today. Hedge funds provide another popular vehicle to access equity investments with typically lower volatility and increased capital protection, compared to direct investments.

 

In the less liquid space, real estate is always a popular area of investment for investors, be it in the UAE or major cities, such as London, Paris, Singapore or Hong Kong.

 

However, as investors have very different goals and requirements, we wouldn’t attempt to single out any “one-size-fits-all” investment. We believe that having a diversified portfolio is the safest way to create compounded growth and that, whatever the market, we are convinced that an unconstrained active approach does add more value and significantly more protection than a passive one.

 

Where are investors putting their money the most in the GCC?

 

In the GCC, equities remain the most preferred asset class amongst investors. In 2014, strong corporate earnings and optimism over regulatory reforms in many GCC countries pushed GCC indices to multi-year highs. This however led to high valuations and stocks seen as more expensive by investors. In the beginning of 2015, equity markets responded to oil prices, which dropped by about 50%, and resulted in investor sentiment plummeting, wiping off most of the 2014 returns from equities. Valuations are consequently now in a range comparable to emerging markets.

 

The GCC markets are generally well known for the high dividend yields compared to most other emerging and developed markets. Dubai and Bahrain lead as healthier and stronger balance sheets were frequently able to weather market volatility.

 

Pension fund assets are very attractive and expected to grow as the local GCC population working for governments is offered high pensions that are growing by 10% YOY.

 

Institutional Investors in the GCC are amongst the most sophisticated in the world, so therefore diversification and active asset allocation are key and GCC Institutions are already invested in most asset classes including regional, emerging markets and global equities, regional, emerging markets and global fixed income, regional and global real estate, hedge funds and private equity.

 

How do you plan to increase your business presence in the Middle East?

 

Mirabaud has a strong presence in the Middle East out of its regional office in the DIFC since 2007. We are one of the few Swiss financial services entities that operate with a Category 1 DFSA license, which gives us the flexibility of booking asset in the DIFC.

 

We are strong believers in organic growth; we find that deep roots make for stable growth. We are developing relationships with a number of like-minded institutions and we like to nurture these.

 

Mirabaud currently manages over AED 123 billion in client assets, comprising around AED 32 billion in Asset Management and AED 91.6 billion in Wealth Management, including AED 7.5 billion of institutional deposits as at 31 December 2014.

 

What would be your advice to both wealth and asset managers in this region?

 

It is a fragmented industry. Wealth and asset managers are continuously being challenged by a growing number of independent advisors and a new wave of digital advisors that automate asset allocation without any personal interaction or face time for personalized advice. 

 

We therefore focus on long lasting relationships with our partners in this region. Markets do go up and down, money goes and comes back, provided that your relationships are strong and that you are adding value to clients and partners, at every stage.

 

Our group has been around for nearly two hundred years and has never failed our clients' trust. Our oldest fund was launched in 1973 and always respected liquidity, while delivering significant performance.

 

Before joining, I asked Mirabaud Asset Management about their commitment to the region: the group purchased their office space in the DIFC in 2010 employs over 40 people here - this significant commitment was another key reason for me to join.

 

What is the future of asset management?

 

Following the 2008 crisis, we have seen increased transparency, openness, more differentiation with active managers being pressured to being truly active and unconstrained. We have also seen increased regulation. Although we believe that what the industry needs is smarter regulation and not necessarily increased regulation, we are pleased with the majority of these changes as they are perfectly in line with our values and what we offer, and are positive for the industry as a whole.

 

 

About Majid Hassan

 

Majid Hassan is the Head of Asset Management at Mirabaud Middle East Limited, where he leads the asset management and business development capabilities for the MENA region.

Majid brings over 18 years of experience in the investment and asset management industry; during which, he held various senior roles within large international and regional groups. He also acted as an Advisor to local financial institutions such as Emirates Investment Bank’s Investment Banking department. He brings a practical skill set in the areas of relationship management, deal origination and business management.

Majid holds a Master of Business Administration from the London Business School and graduated from the University of Westminster in London with a BA in Business Management. He is the president of the Gulf Alumni Association of London Business School.

 

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