Mr. Jirawat Supornpaibul, Private Banking Group Head of KBank, said "KBank Private Banking is confident in investment portfolio management with the Risk-Based Asset Allocation principle. This concept is shared by our business partner, Lombard Odier, which has been providing advice to customers worldwide for more than 225 years. Lombard Odier believes that the best method of investment distribution and allocation is to manage risks of investment portfolios within an established level and to use risks as the criteria of investment allocation in each asset."
In Risk-Based Asset Allocation, investment allocation primarily considers the risks associated with each asset. Investment funds are managed in accordance with the risk framework that is acceptable to investors, and investment proportion is adjusted per changes in risks of each asset. Therefore, all types of assets will generate positive returns in the long term, however high or low depending on the prevailing economic conditions. Successful long-term wealth accumulation will be obtained through risk management of the investment portfolios, without setting up a definitive investment proportion for each asset, as the proportion will vary with the respective changes in risks of each asset.
Recently, KBank Private Banking and Lombard Odier introduced a new fund, K-ALLROAD-UI, which implements Risk-Based Asset Allocation principle. The fund aims to generate consistent and satisfactory returns in the long term and amid all market situations. The notable features of K-ALLROAD-UI that differentiate it from other risk-based funds include the following:
1) Diversifying risks to all assets worldwide, including existing and new assets such as government bonds, debentures, commodities and instruments with returns benchmarked with inflation and market volatility. This is because sharp declines in returns of some assets can be offset by better returns of others, thus helping ensure the investment portfolios meet their targets. Concurrently, investments can be diversified anywhere in the world, including developed and emerging markets, helping diversify risks and reap benefits from growth seen in numerous industries and countries around the globe.
2) Investment portfolio is systematically managed, which is suitable for a master investment portfolio, as every trade is transparent. Based on past data, sentiment-based portfolio management approaches are invariably inconsistent despite being undertaken by experts. We believe that the integration of a systematic management strategy with a traditional management approach holds the key to avoiding personal sentiment-based errors more efficiently, thus helping generate regular returns for investors.
3) Outstanding operating results as evidenced by the fund's performance over the past nine years. The master fund offers positive returns of 100 percent (if investments last for at least three years) and can keep losses below established limits within a year as expected. The proportion of investment in each asset class is adjusted and managed steadily in line with risks that change within the established limits. Most importantly, the downside risk management system helps restrict losses despite investments being made during an economic crisis or in a market condition where all assets concurrently decline. Additionally, all invested assets have sufficient liquidity, which is considered an important factor for portfolio risk management to ensure that losses are within the established limits.
Mr. Jirawat added, "Since the establishment of the LO FUNDS - ALL ROADS SYST. NAV HDG, (USD) I master fund on February 15, 2012, assets under management (AUM) has exceeded USD 10 billion, capable of offering returns of up to 60.8 percent (Data as of October 15, 2021). Annual volatility stands at 4.9 percent, with highest historical loss recorded at 8.0 percent. Under the principle of Risk-Based Asset Allocation, KBank Private Banking (KPB) is confident that this investment strategy can generate consistent expected return on investment (ROI) regardless of the business cycle. Moreover, the expected ROI for K-ALLROADS-UI is projected to be 4 percent higher than short-term US Dollar deposits , annually - with risk of maximum loss in the first year estimated at 10 percent.
K-ALLROAD-UI is a fund reserved exclusively for institutional investors and high net worth individuals (HNWI), with an investment period of at least five years. For those seeking higher ROI than a money market fund or regular deposit, IPO period of K-ALLROAD-UI is October 28-November 9, 2021. For more information, please contact the responsible private banker or call the KBank Private Banking Contact Center at 02-888-8811.