"Swiss asset management must continue to grow in niche markets "

Jean-Christophe Rochat
Chief Investment Officer, Head Asset Management, Banque Heritage

 

Mr. Rochat, as Chief Investment Officer you must constantly be at the market pulse: What data do you look at most regularly?

We live in a complex world where information is everywhere, and where every piece of information can lead to an almost instantaneous and sometimes completely disproportionate reaction. That's why I believe that a significant part of a CIO's time should be devoted to gathering and processing information. For me, "Bloomberg" remains the source of data that I consult most often, both for raw market data (market evolution) as well as market news. I also enjoy reading the international press, whether it is to understand the macroeconomic factors affecting the economy, geopolitics or key investment trends. For me, the "Financial Times" remains a must-read, despite its Anglo-Saxon bias. And let's not forget the social networks. The LinkedIn platform is a rich source of information, and it is free! But you need to sort out the information that is valuable to you!

Asset Managers often say: You have to stay true to your convictions. What changes in the data convince you to deviate from your convictions?

That is absolutely true. It's important to focus on the beliefs you've built up over time, over the cycles. I'm more inclined to revise my views, and therefore my positioning, on the basis of macroeconomic data rather than micro data. On the other hand, to avoid overreacting, I need to observe changes that materialise over meaningful periods of time, rather than in one or two successive observations.

Banque Heritage offers traditional and alternative investment opportunities. How does a relatively small player compete with global asset managers who can offer the whole range of investments?

Banque Heritage was a multi-family office for over 15 years before becoming a bank. As with any family office, independence in its investment decisions has always been a key driver of performance. Today, this independence remains at the heart of our clients' investment process. Aware of the difficulties of the fund management business, especially for a small player, we chose a transparent open architecture model many years ago already. This allows us to remain agile and flexible. We believe that many players in the market still want to manage investment products and are somehow forced by their size to keep these products within their discretionary portfolios at all costs. This is clearly not a model we want to offer to our clients and that's what they like about us.

Are you looking at new investment opportunities to have a wider offering and what are they?

Since 2015, we have been very active in private debt and, to a lesser extent, in private equity. Following the turnaround in monetary policy, we put this investment theme on hold as the rise in interest rates weighed heavily on both business models and valuations. We are currently evaluating these strategies as we believe the end of the tightening is near and opportunities will emerge. Throughout this period of tightening, companies have shown incredible resilience, adapting their business models to absorb higher production costs and ever-increasing financing costs. Many of them are extremely well operated. A few more months and there should be plenty of investment opportunities.

Where do you see the most room for improvement for the Swiss asset management industry to be more competitive?

Switzerland is one of the most competitive countries in the world and a recognized hub for innovation. It has successfully positioned itself as a pioneer in the custody of digital assets, thereby strengthening its role in global wealth management. However, as a victim of its own success, it suffers from productivity costs that are often higher than those of other 'innovative' financial centers. New technologies such as artificial intelligence and blockchain should be adopted more intensively by asset management players in order to increase the efficiency of certain business models and reduce costs. The Swiss industry also needs to expand its presence and influence in global markets, particularly in emerging regions such as Asia and the Middle East, where there is strong demand for "made in Switzerland" asset management.

Besides the big three letters ESG: Where do you see growth opportunities for Swiss asset management?

This question is closely related to my previous answers. Asset management in Switzerland will not find a growth driver in plain vanilla strategies, where a large number of international players have a dominant position. Instead, it must continue to grow in niche markets by developing innovative investment solutions integrated into efficient business models. In my view, unlisted investments remain one of the most promising markets today, in a world where financial intermediaries are reducing their risk appetite, where the search for capital remains paramount and where demand for non-traditional investments is growing rapidly. Combined with artificial intelligence and digitalization, the offer should continue to convince and obey democratic mechanisms.

Do you see differences in asset management culture between Geneva and Zurich?

Less and less. Geneva and Zurich remain two important financial centers. Before 2008, Geneva was known for its private banking and wealth management expertise, while Zurich focused more on investment banking and insurance, i.e. more complex engineering. While the insurance business is still very much present, the numerous regulations introduced over the past decade and the setbacks suffered by Credit Suisse have probably marginalized investment banking. As a result, business lines and client bases have tended to become more homogeneous.

Name three books a professional in asset management should read.

"The Intelligent Investor" by Benjamin Graham. It provides you with the fundamentals of value investing. "Rogue Trader" by Nik Leeson: It is a reminder that we didn't have to wait for Lehman Brothers to discover that you can sink a bank with financial products. And if we had to name a film, I would definitely recommend "The Wolf of Wall Street", even if mostly for entertainment purposes.

Where do you find space to wind down after a period of working hard?

I charge my batteries at home, with my kids and my wife. Running is also an important refuge for me.