Private Banks: What COVID-19 Means for Product Choice
October 5, 2020
Private banks around the world are having to review their product offerings in response to the great uncertainty caused by the combination of COVID-19, U.S.-China tensions, and Brexit. This white paper provides an overview of the changes underway in Europe, the U.S., and Asia.
What our White Paper Uncovers
In Europe, conservative-type assets are in demand as clients opt for capital preservation rather than growth. Many believe that environmental, social, and governance (ESG) investments are proving better placed to weather the turmoil. Thematic funds and exchange-traded funds (ETFs) are gaining favor among private bank clients seeking the best sectors to withstand the volatility, while looking to cut costs where possible.
In the U.S., private banks have seen an increase in demand for liquidity and downside-risk protection. Clients are turning to safe-haven assets (e.g., cash/gold) and alternative asset classes (e.g., commodities/real estate) in search of non-correlated returns. Allocations to investment-grade and higher yielding fixed-income securities are also increasing.
In Asia, amid conservative investor sentiment, private banks are focusing on long-term structural themes such as technology and healthcare. Several new products based on ESG principles have been launched. Against the backdrop of market volatility and low yields on global bonds, investors are expected to favor high-quality, low-risk assets. Alternative assets may also feature in private banks’ plans for diversifying investors’ portfolios and boosting returns.