UBS continues to witness sustainable investing demand from wealth management clients in Asia with a $500 million surge in related discretionary assets between February and July alone.

In January 2019, the global private bank had $405 million of assets under management (AUM) in its flagship «100 percent sustainable cross-asset» mandate, according to a statement, which soared to $1.5 billion – a 270 percent increase – by July 2020. This compares to a global AUM increase of 330 percent in the same period.

«The shift in preferences toward sustainable products and services is only just beginning,» said Iqbal Khan, co-president of UBS Global Wealth Management. «We believe sustainable investments will prove to be one of the most exciting and durable opportunities for private clients in the years and decades ahead.»

In the first seven months of 2020, the number of UBS clients in the region invested in the sustainable portfolio and fund grew by 50 percent, demonstrating a strong increase in the adoption of ESG investing not only by the assets of few individuals. Sustainable investing demand spanned across diversified and thematic portfolios focused on areas such as healthcare and F&B disruptors.

Covid Acceleration

After adding around $600 million in 2019, AUM growth accelerated during the coronavirus pandemic which resulted in an additional $500 million between February and July this year.

«COVID-19 has put the exclamation point on one of the most important shifts in financial services in a generation,» said Tom Naratil, co-president of UBS Global Wealth Management and president of UBS Americas.

«The pandemic has brought the vulnerability and interconnected nature of our societies and industries to the forefront of investors’ minds and shown that sustainability considerations cannot be ignored.»

No Performance Discount

Especially in Asia, the issue of potential sacrificing returns has been heavily spotlighted by investors that are often viewed as less willing advocates of environmental or social causes compared to western peers. Matching, or even outperforming, existing non-ESG versions of portfolios is key to winning clients in the region and UBS’s portfolio outdoing traditional counterparts by 1-2 percent this year, the bank said, marking another year of outperformance.

Year-to-date performance remains positive including a 26 percent rebound since the end of the March sell-off.

«Not all sustainable investments are created equal,» said Mark Haefele, the Swiss private bank’s CIO. «Investors need a properly diversified sustainable portfolio that has the flexibility to source new opportunities and consider new risks. A well-designed sustainable portfolio can adapt to evolving market and economic environments, and help clients weather the kind of volatility that we expect to persist throughout much of the decade ahead.»

Sustainability as Default Option
In addition to showcasing its accolades, the statement also focused on a new key policy for UBS Global Wealth Management moving forward: sustainable investments will now be the preferred solution for private client investment. Whereas most of its peers are focused on transitioning traditional investments into sustainable ones or merely promoting the latter as an option to consider, UBS will make investing with ESG factors the default approach.

«Sustainable finance is a firm-wide priority for UBS and our aim is to help clients take advantage of new opportunities and manage 21st century risks more smartly,» said Huw van Steenis, chair of UBS’s sustainable finance committee and senior advisor to the CEO. «As sustainable finance has moved into the mainstream, it is a critical component for clients and a strategic growth opportunity for UBS.»

Globally, UBS manages $488 billion in core sustainable assets.