Vontobel is doing fine even without Rajiv Jain, says Axel Schwarzer in an interview with finews.com. The head of asset management expects active investment to witness a revival and explains what his bank plans to achieve with its big-data initiative.

Axel Schwarzer, if you were to believe in what observers of the industry are saying, Vontobel is destined to disappear, just as all other active asset managers, because only passive investing will remain in demand. What would you say to that?

The opposite is the case. I see us as a winner within asset management.

Please explain!

At all our boutiques, assets under management are growing steadily – with the exception of the Quality Growth Boutique, which was in sort of a special situation after the departure of fund manager Rajiv Jain and the effect Trump had on emerging markets well into the new year.

Our performance and the positioning of all boutiques are fine. We have also done some acquisitions…

...Twentyfour Asset Management and Vescore...

…exactly. The fact that Vontobel is an active participant in the consolidation of asset management in Switzerland tends to get forgotten.

Investors very quickly turn their back to active asset managers if returns aren’t there or if the return is achieved with too high a risk. That’s when the cost factor is being used to explain the advantage of passive investing. Do you have such examples?

Vontobel of course is also exposed to the trend to passive investments. But I believe that the discussion about active or passive partly is already a thing of the past.

The discussion mainly focused on active managers who had built their funds upon a benchmark and didn’t manage to return a yield sufficient to pay for the cost.

«The quality of passive strategies is declining in volatile markets»

Vontobel is a different asset manager. We are active in what we call «conviction». Our managers don’t rely on a benchmark but on their convictions. We are specialists and will always find our niche.

Active management is at a disadvantage in rising markets.

It you only consider the cost side, yes. But in that discussion about the price, one often forgets that even the benchmark performance carries a risk. The quality of passive strategies is declining markedly in volatile markets – and active management is able to display its strength.

In other words, the trend toward passive investments is also a consequence of sustained good market performance?

Yes. But this will change again and active management is experiencing a revival. Our performance is a point in case: this year, 80 percent of our funds are above the benchmark.

Global asset management recently has seen a series of takeovers. What’s your view seen from the perspective of a small company?

We’re not that small! We’re the no. 37 in Europe and eighth in Switzerland. And that’s partly because, as I said, we are part of the consolidation.

What will happen next?

We want to grow organically, but we’re also on the lookout for suitable opportunities. We are following clear guidelines for acquisitions: there’s a focus on fixed-income or multi-asset providers in Switzerland, Germany, the U.K. or the U.S. Asia is also a possibility, but the market is very expensive.

Judging from the outside, it looks as if Vontobel is developing asset management to a much greater degree than private banking. Do you get the resources that you need?

No. We have a very frank exchange within the top management where and when an acquisition makes sense and will help Vontobel as a whole to progress. That’s the way the organization is proceeding as a company. There’s no jealousy.

What does the future look like at Vontobel Asset Management after the era of Rajiv Jain?

Even if it is tough to imagine – there’s life after Rajiv Jain at Vontobel – and as results are showing, a very good life as well. Two reasons for this: we have diversified our customer assets substantially in the past years and continue to do so.

«Institutional clients have also been in touch again»

We see strong inflows in fixed income in particular. And secondly, the investment team of more than 20 people at the quality growth boutique (which Jain previously ran) has stayed together. The investment procedures have remained unchanged. Several funds have already seen net new money inflows. Even institutional clients, which were forced to pull their assets out due to the management contract have been in touch again.

The second big topic in asset management is digitization. Which ones are your projects?

We are working on an app that shows the entire information about products, portfolio, development and assets at one glance. A further project is to make better use of our internal client data through new digital solutions in a bid to allow us react faster to demands and changes with corresponding investment and product solutions.

And what more?

In active asset management, given an increasing market efficiency and equal access to information, you need first-class research. To generate alpha, we use big data and aim to further expand this, to direct information into research and portfolio management.

Hence, we expand our teams with specialists who understand big data research. And we are investing in systems for the processing of the information for portfolio management.

Axel Schwarzer has been in charge of Vontobel’s asset management since 2011. The division manages 92 billion Swiss francs. Schwarzer, 59, spent two decades at Deutsche Bank, first in private banking, later in asset management.  A German citizen and trained lawyer, Schwarzer was first a member of the executive of DWS Investments and, starting in 2005, CEO of DWS and head of Deutsche Asset Management Americas.