“While investment excellence is first and foremost about performance, institutional investment quality is more than just performance...”
Christel Rendu de Lint
Deputy Head of Investments
The art of future-proofing investing
Amid the most challenging market conditions in decades, a resilient long-term strategic approach is key to withstanding the volatility that accompanies the tumult. Is it possible to future-proof investing? Christel Rendu de Lint, Deputy Head of Investments, explains why Vontobel’s strategy focuses on delivering future-proof investment solutions.
Vontobel recently provided an update on the investment firm’s strategy, clarifying the strategic steps to be taken in 2023-2024 to deliver on its ambition to be known as one of the leading and most trusted global investment firms by 2030. In this Q&A, Deputy Head of Investments Christel Rendu de Lint outlines how, as a key step on the path to 2030, Vontobel will act to deliver future-proof investment solutions.
Q: You recently said that market conditions are among the toughest seen in the last 60 years. How are you delivering future-proof investment solutions amid such conditions?
A: Market conditions are indeed challenging right now, and I have been talking about them being the worst conditions in decades due to the simultaneous correction in both fixed income and equities. We have witnessed the most dramatic synchronized monetary policy tightening since the modern times of central banking. And that, in turn, has led to a generalized correction across asset classes and market segments, with only energy stocks and commodities standing out as exceptions.
At Vontobel, preparing for the future means reiterating our strong focus on our core activities, notably on being a pure play investment firm. Like our peers, we are taking measures where necessary, such as cost containment, to ensure we keep the leeway required to attain our long-term goals.
Despite market conditions, we believe the fundamental drivers of growth for an investment firm such as ours remain intact. Our expertise, business model, and reach position us very well – we will continue to thrive as an active investment manager and delivering future-proof investment solutions is part of this. Our relentless focus, because it represents our inherent “raison d’être”, is to deliver outperformance to all our clients. In 2023 and 2024 specifically, we want to focus on three core axes: offering active solutions in the context of new regimes; bringing Private Markets to our clients through partnership(s); and building ESG solutions to empower our clients to build a better future.
Q: Before we dive into these three axes, can you briefly speak about your business model?
A: Yes. At Vontobel, our investments capabilities come to life in a unique structure consisting of six boutiques that offer institutional-grade expertise to all clients, regardless of their wallet size, via a diversified range of strategies. And we do this globally, with an onshore presence in Europe, the US and Asia, through a team of 300 investment professionals.
While investment excellence is first and foremost about performance, institutional investment quality is more than just performance, and that is the remit that we are giving to all of our teams, independently of whether they are primarily focused on private or institutional clients – to deliver institutional investment quality to all clients. It’s an approach that works. As of the end of September, our assets under management stood at CHF 123 billion, a reflection of our strong and proven track record of growing alongside our clients.
Q: How is Vontobel delivering outperformance and offering active solutions in the context of new regimes?
A: Delivering performance and delivering outperformance is not a new focus by any means – it is our purpose as an active investment manager. Nevertheless, more than ever we are squarely focused on it right now. In an environment such as today’s, in which markets are getting more complicated, we want to make sure our investment teams keep their eyes on the only ball that matters – the performance that they deliver to our clients. This includes providing supportive conditions to our teams working to deliver the investment excellence, whether this be support with legal and compliance topics, or with trading, and so on.
Now that’s an internal answer, to some extent. There’s also the question of what these new regimes are. The world is changing – and this is something we’ve known for a long time. But how to remain relevant in a changing world? Staying relevant entails remaining alert to secular macroeconomic shifts as well as their resulting impact on client demands and portfolio construction needs. No one has a crystal ball to look into the future, however, in asking ourselves what may lay on the horizon, there are two potential secular shifts that seem to be quite plausible.
The first one is that we could face higher inflation for longer. And the second one is that we might face more antagonism between the geopolitical blocs than we have known in the past. So, if we have higher inflation for longer, let's start with the difficult question: how to deliver performance beyond inflation? This is most difficult for lower return assets. What does this mean for fixed income? Is fixed income still relevant? If inflation remains high, will fixed income deliver returns? While such questions are not new, it’s clear why this is a focus more than now ever.
Q: Why the focus on private markets for 2023-2024?
A: The second axis is about private markets – we want to deliver access to private markets to our private clients through a partnership. The idea is to be able to offer private markets as a core building block to our private clients. This will happen very much true to our spirit of being investment-led, requesting and requiring institutional investment quality.
The first step is therefore looking to form a partnership with a truly institutional and international private market player. We want to partner with someone who has this institutional pedigree to bring us on this journey. Given our commitment to private markets, working alongside an institutional partner in this area is also an opportunity to accelerate our learning and development as a firm.
As we announced at Investor Day, private markets are set to remain a strategic priority going forward – they are a core strategic piece. Yet the timing might also be favorable currently, given what we have seen on the public market in terms of correction this year, which could get mirrored next year in performances for private market assets.
Q: Your third axis in future-proofing investing relates to ESG and the path to sustainability. Vontobel’s long been interested in sustainability, so what changes can clients expect to see in this area?
A: This is more about a continuation than a change. We are investment-led and, to me, being investment-led means to display investment integrity in everything that we do. We can only help and partner with our clients if we do not compromise on the quality of what we do. This approach also underpins the path to sustainability. When it comes to ESG, we have aligned our multi-boutique business model, which consists of multiproduct, multi-investment teams, with four ESG investment principles.
We incorporate these principles into our investment process because we believe, over time, that this best enables our clients to achieve their investment objectives. As active investors, we make use of the tools of engagement and voting to perform our fiduciary duty as stewards of our client’s capital. Our investment teams are accountable for the application of our ESG investment principles, and we commit to transparency through disciplined disclosure, reporting and dialogue.
Now, what our investors want to have and make in terms of ESG is their choice. We are continuing to build on our ESG solutions to offer our clients different options to fulfill not only their financial aspirations but also their ESG aspirations, whatever these may be. What we commit to is to deliver properly on the input aspect so that the output makes sense from a sustainability perspective. We ourselves want to focus on our impact capabilities. This is a space that speaks to Vontobel’s DNA that that resonates with many clients, and thus one that we want to scale and continue to develop.
I want to add here that our multi-boutique approach gives an edge – it brings together debate and analysis from different perspectives. Diversity of thought and approach sparks innovation and paves the road to success. This is one reason why, when it comes to ESG, we actively engage in debate. Not only are innovative solutions needed urgently, new ways of thinking open-up ESG-related investment opportunities. As part of our commitment to forwarding the wider discussion on ESG, we recently announced a partnership with the Financial Times Moral Money Forum. It’s just one way we’re engaging in industry debate about ESG and the macro and philosophical questions involved, as well as exploring and presenting solutions that organizations are developing.