A slowdown in emerging-market growth bruised Vontobel Holding AG (VONN)’s performance in the second half of last year, Chief Executive Officer Zeno Staub said.
“Emerging markets are in general undergoing a change to a growth rate of about 5 to 7 percent, from a rate of 7 to 10 percent,” Staub, 44, said in an interview at the bank’s headquarters in Zurich today. “That always hurts if growth slows down.”
Investors adopting a “top-down” approach to asset allocation shifted money from developing countries, resulting in slower inflows to emerging market-focused funds in the fourth quarter, according to Staub.
Vontobel, established under the family name as a brokerage in 1936, has hired fund managers with international active investing expertise as it seeks to persuade potential clients worldwide to allocate funds to its investment banking, asset-management and private-banking businesses.
Luc d’Hooge joined from Dexia SA in April to start an emerging market debt fund that’s declined 5 percent since it opened on May 15, compared with a 5 percent drop in the JP Morgan EMBI Global Diversified benchmark, according to data confirmed by the bank. A separate Vontobel emerging markets bond fund, which opened in 2011, fell 14 percent over the same period since May.
The share of net new money invested in emerging-market equities dropped to 61 percent at the end of December from 86 percent at the end of June at Vontobel’s Quality Growth asset-management business, according to a presentation today.
Markets from Turkey to South Africa and Argentina were roiled during the past month as investors sold off emerging-economy currencies, stocks and bonds, prompting emergency measures from governments and central banks. The bout of risk aversion follows the U.S. Federal Reserve’s decision to scale back asset purchases and China’s pledge to rein in leverage and give market forces a more decisive role in allocating resources.
Global investors pulled $6.3 billion from developing-nation equities in the week ending Jan. 29, the biggest outflow since August 2011, according to Barclays Plc, citing EPFR Global data.
“The emerging-market sell-off really gathered pace in 2014, so it will be interesting to see what outflows they’ve had this year” at Vontobel, said Andrew Stimpson, a London-based analyst with Keefe, Bruyette & Woods.
While Vontobel’s investment managers are increasingly “selective,” many markets and regions still have “strong fundamentals” and a “positive outlook,” Staub said.
“We are convinced the underlying demographics and dynamics of these economies will create above average mid- to long-term growth,” he said.
Vontobel’s asset-management unit reported a 37 percent increase in pretax profit last year, even while navigating the emerging-market rout, the company said today. Net inflows across the three businesses dropped to about 900 million francs ($1 billion) in the second half, from 8.2 billion francs in the first half.
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