Pictet Wealth Management rolls out a new strategic asset allocation

Pictet Wealth Management, part of the Pictet Group (CHF 633 billion in asset under management*), has introduced a new strategic asset allocation with an increased focus on credit and equity strategies at the expense of liquid alternatives and government bonds. Yannick Bigeard, executive director and head of portfolio structuring, said the new strategic allocation stems from the bank’s capital markets assumption that over the next ten years the market landscape will change.

Pictet’s move to a new strategic asset allocation started in the third quarter of last year and came into effect at the start of this year, Bigeard said. This is the first time in five years that Pictet has made a substantial change to its strategic framework but Bigeard said the firm might consider more frequent, if smaller, adjustments going forward. “As traditional risk assets such as equities and credit are expected to do well over a strategic investment horizon, we have decided to put more emphasis on them rather than defensive assets that offer fewer diversification benefits than they used to,” Bigeard said.

The next steps for Bigeard include further taking account of the environmental, social and governance and responsible investing in investment solutions. “We have different levels of integration of ESG across different single and multi-asset programmes to answer the range of sustainability preferences expressed by our clients,” he said.

The challenges involved in combining private assets with liquid multi-asset solutions – for example the definition of sound and robust capital commitment strategies – is another focus, with the aim of making these high-yielding asset classes accessible to smaller clients with a certain tolerance for illiquidity, Bigeard said.

Another important area is artificial intelligence. “We are generally enthusiastic about AI, as illustrated by the launch of our internal chatbot powered by ChatGPT,” Bigeard said. “On the investment side, we are trying to leverage generative AI as well as more established AI techniques such as natural language processing and nowcasting via alternative data to enhance all layers of our investment processes,” he said. He added that Pictet is putting fresh resources to work this year on integrating large language models into investment tasks and risk management.

Source: Pictet Rolls Out New Asset Allocation, Continues Push Into Strategic Initiatives, EQDerivatives, March 2024

*Figures as of 31 December 2023 (unaudited)

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