Going upstream is part of Vontobel’s DNA
Vontobel has succeeded in the Italian market because it stuck to principles for managing assets and growing the business, explains Francesco Tarabini Castellani.
Swiss asset management company Vontobel opened its office in Italy back
in 2003 when the majority of asset managers were closing down because
of the looming financial bubble, Francesco Tarabini Castellani (pictured) head of fixed
income global sales and head of Asset Management Italy says.
Being contrarian, preserving the company’s values and standing by its
specifics are the characteristics Tarabini Castellani points at to explain Vontobel’s success both globally and in the Italian office which he heads.
The Italian office has grown consistently since its launch, and currently manages some €3.6 bn in AUM, across portfolios for institutional and wholesale clients, with strategies focusing on Vontobel’s quality growth equities, fixed income and multi asset class boutiques.
“I joined Vontobel in 1997 and I saw its assets grow significantly over the
years. The quality growth equities strategies AUM, managed by our colleagues of the New York office for instance, has gone from roughly $10bn to over $40bn just in the last three years. This reflects the success of the team’s disciplined but flexible investment process, which itself is guaranteed by the Vontobel’s business nature as a highly stable and independent banking group backed by a family that still holds over 50% of the voting rights, has a long-standing history of almost 100 years and a very high capital base with above 25% Tier 1 capital ratio,” Tarabini Castellani explains.
The asset management activities have become increasingly important
to the firm’s business, he adds, mainly thanks to the success of the quality growth equities strategies put in place by the US team, which has remained
the same since establishment in 1988.
The Italian market, Tarabini Castellani says, has preserved more than others Vontobel’s original boutique approach, as its products are aimed at clients with a high level of knowledge of the asset classes proposed to them.
“Italy is one of our most interesting and successful markets, particularly
since 2008 when we started our retail cooperation’s activity. Italy is definitely
a country we believe in and on which we have bet in the most difficult years
for both the country and the market. We started in 2003 with wholesale
clients, offering funds of funds, unit-linked and discretionary portfolio
management, and we then have expanded to institutional clients and
finally to the retail sector, which is now very important to us,” Tarabini Castellani says.
Vontobel offers Italian investors its whole range of asset classes, with a
particular focus on quality growth. Discussing the Italian preference for fixed
income products over equity, Tarabini Castellani says that, while it is certainly true that local investors have been historically more inclined towards them, the tendency is actually notable at a European level.
However, investors are often caught in the “absolute return illusion”, which is basically the illusion of earning more just because they preserved more and risked less, he says.
“For this reason, our approach to investment in the multi asset class boutique asks for the clients’ collaboration to help us understand what level
of risk they are prepared to take, which normally leads us to the best portfolio structure for each of them,” he says.
But how does Vontobel manage to maintain business growth while trying
to go upstream and shy away from the easy way out or the solutions dictated by market sentiment?
“Our quality growth strategies take a bottom up approach, investing mostly
in global companies with understandable franchises that have shown double digit earnings growth, which we believe are sustainable in the future
and can be bought at discount. In fixed income we have different strategies
according to the specific asset class, focusing on corporate credit (European
investment grade and global high yield), emerging markets debt, absolute return bonds and Swiss franc denominated bonds,” Tarabini Castellani
As part of its investment philosophy, Tarabini Castellani says that his fixed
income team tries to avoid blindly following rating agencies’ evaluations.
“Ours is a bottom-up approach that looks at single countries and at single
issues within them,” he says. Finally, preserving the firm’s specifics is vital to Vontobel’s business developments plans. “As our honorary chairman [Hans Vontobel] keeps reminding us, acting according to our DNA is essential for us and it couldn’t be truer. If we had changed our approach after the financial crisis we would have destroyed an added value
of over 20 years. In this sense we are still most of all a boutique,” Tarabini