Asset Allocator takes a keen interest in the differences in portfolio makeup between private clients and off-the-shelf MPS propositions, among other geeky things.
And where better to scratch that itch than by taking a look under the bonnet of Swiss private bank Mirabaud Wealth Management.
Its DFM arm presides around £700mn in assets, and we sat down with their UK head of portfolio management Jonathan Unwin for a chat about how it all works.
An interesting quirk is Mirabaud’s ability to leverage its expertise for clients by investing in its in-house Swiss small and mid-cap fund, which is, much like the Swiss flag, a big plus for clients.
“I expect that being a Swiss bank, we have more of an interest in the Swiss market than perhaps a purely British private bank would have,” said Unwin. “So we do treat Switzerland and the UK as separate to Europe, and we tend to follow the MSCI World approach. So the UK is, say, 4 per cent of the MSCI World in terms of market weight, and Switzerland about 2 or 3 per cent.”
He added that the team actually holds more in Swiss stocks than in the UK, but that's down to a tactical overweight rather than any structural positioning.
Unwin said he is a fan of the quality defensive nature of Swiss stocks.
Alongside the tapering down of a home bias (unless you regard Switzerland as their home), Unwin says another difference between managing private clients and MPS offerings is the absence of need to include more illiquid assets, such as property, in the portfolios.
In particular, British clients tend to already have a lot of direct property exposure themselves, he said, so there’s little need to take on extra risk through Mirabaud.
Instead, he prefers to use a variety of commodities, including gold, plus an array of hedge fund strategies that may dip into currency funds, CTAs, and managed futures, should the investment committee see fit.
The council will decide your fate
Unwin says another key differentiator is the bank’s flexibility to make trades at short notice, unlike larger houses.
“I’ve worked at a very big bank in the past and it’s actually like turning the steam tanker, trying to implement a trade and trying to implement an idea over billions and billions of assets and all sorts of different clients and different strategies,” he said.
He added that Mirabaud’s size allows it to take advantage of market patterns in the space of a day or two, as opposed to weeks, like some larger shops.
