Summit News

JP Morgan Private Bank sees hedge funds comeback

GENEVA (Reuters) - Wealthy clients believe the worst of the crisis is probably over and have started to come back to higher-risk assets such as hedge funds, a top banker at JP Morgan Private Bank JPM.N said on Wednesday.

Felipe Godard, Head of European International Markets at JP Morgan Private Bank, also told the Reuters Global Wealth Management Summit in Geneva he was on the lookout for buys in his region and expected double-digit revenue growth in the coming years.

“We have seen a return of risk appetite. Clients are comfortable with the risks of hedge funds if those risks are explained,” said Godard, whose bank is the world’s second-largest hedge fund manager by assets.

“We did see a pull back at the beginning of the year/end of lat year. Flows are coming back now. Flows this year for hedge funds are positive, in our experience.”

JP Morgan Private Bank, the world’s number six wealth manager with about $600 billion in managed assets, had typically allocated about 20 percent of a client’s portfolio to alternative investments before the crisis.

“Toward the third and fourth month of this year hedge funds started to offer the returns they were supposed to offer,” Godard said.


Godard also said JP Morgan, which caters for the super rich with $25 million and above, was hoping to find a suitable target in the consolidation wave that is shaking up the industry.

“The challenge for us in EMEA or Switzerland is to find a partner suitable for the segment of the market we are going after,” Godard said.

“We have analyzed different banks, but we haven’t found what we’re looking for. We are looking for opportunities in EMEA,” he said, adding the bank sought a target that catered for the ultra rich and that had a good pan-European presence.

Julius Baer BAER1.VX said on earlier on Wednesday it had agreed to buy the Swiss private banking assets of Dutch bank ING ING.AS for 520 million Swiss francs ($507 million), the European wealth management industry's biggest deal since the crisis began.

Godard, who sees the wealth management segment booming on the back of the expected wealth creation in large emerging markets such as Brazil, China and India, said he was confident his region could boost its future revenues.

“I am expecting our area to grow 15-20 percent per year over the next five years. I think it is achievable,” he said.

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Reporting by Lisa Jucca, Editing by Hans Peters