The active, the passive and the tech
After a ‘good year so far for equities and private assets’, Unigestion’s Fiona Frick considers passive strategies and tech giants.
2015 is “a good year so far for equities and private assets”, according to Unigestion’s chief executive officer Fiona Frick (pictured).
The Swiss equity manager has recorded “between €1bn and €1.3bn” in net new inflows during the seven first months of the year.
Frick says Unigestion’s development goal is not to take part in the race for assets under management but rather to expand the institutional client list of the firm.
Over 250 institutional investors have given mandates to Unigestion and the company targets “an addition of five to ten institutional investors a year.”
Unigestion offers risk managed strategy based on equity markets.
“Regarding the current environment with equities, expensive valuations and investors worrying about the future of equity markets, it makes sense,” Frick explains.
“We are still positive on risky assets but our approach is still defensive,” she adds. Frick has also noticed that clients’ expectations on their returns have changed.
“Before, when institutional clients gave us mandates to manage assets on European or Japanese equities, the priority was to maximise the returns. Nowadays, it has changed.
“They want to maximise probabilities. They want to optimise their chances of having returns on a five year period and look for multi-asset strategies or equity strategies with use of derivatives,” Frick stresses.
All strategies at Unigestion remain actively managed but Frick does not neglect the contender that passive management has become in recent years.
“From an active manager perspective, passive management is obviously a danger. People start to say that active management does not reward enough and that it is expensive. But as the market has been driven by quantitative
easing policies since four years back, being risk managed did not reward so much on the equity market,” she says.
However, Frick considers that as investors increasingly adopt passive strategies, more opportunities will be created as it will divide the market between stocks being undervalued and stocks being overvalued because they will be part of an index.
“That will create correlation between stocks and bring interesting arbitrage opportunities for active managers,” Frick believes.
TO BE TECH OR NOT TO BE?
During the latest FundForum in Monaco, Frick took part to a panel discussing the entry of technology giants into the asset management industry.
Along with thoughts of Google and Amazon being “perfect distributors”, she also suggests that asset managers can learn from them.
“Tech giants have the benefit of being more client focused than asset managers. As asset managers, we are far too from the needs of our final clients,” Frick says.
Assets managers have to clarify and simplify their message but this should not be a reason to simplify the tool according to Frick.
“Managing assets within a regulated environment in which risk remains and markets are ever more unpredictable is complex.”
“Tech giants have built clients’ ecosystems. If we can plug ourselves to them, we will benefit from it,” she concludes.