An interview with Philippe Rohner
Philippe Rohner is a senior investment manager with over 20 years of experience as well as the co-manager of the Water Fund at Pictet Asset Management. Philippe, a Brazilian with Swiss roots, who began his career as chemical engineer in oil refining, air and water management projects, shares his experience with thematic investing at a Swiss bank.
Pictet Asset Management is a specialized asset manager with a large array of solutions and investments for investors all around the world. It currently manages USD 186 billion and its clients include some of the world’s largest pension funds and financial institutions. The asset management company is part of the Pictet group, established in Geneva in 1805.
Since the beginning of this century, noting the increasing interest by individuals to save through mutual funds, Pictet began offering theme-focused funds based on longer term (+ 10 years) trends, also known as “megatrends”. Rohner, together with colleague Hans-Peter Portner, was instrumental in commercializing the first mutual fund that focused on the water services industry. Today, some 20 years later, Rohner manages the various thematic advisory boards, each dedicated to a specific thematic fund. These funds range from themes addressing our basic needs (water, timber, energy, health, nutrition, security) to enabling technologies (biotech, robotics, digital) to addressing the environmental challenges we face (global environmental opportunities) to addressing consumer aspirations (premium brands) and where we would prefer to live (smart cities).
Overall, the thematic funds total approximately $35 billion Euros under management, with the water fund representing 6 billion Euros.
Although all thematic funds are global by definition, each theme tends to have a regional and/or sector bias. The investments themselves consist solely of listed equities of public companies. This provides the client with daily trading liquidity, thus not tying up their savings should they wish to liquidate their investments. A further aspect is that themes help identify companies along value-chains which helps to focus investment managers on knowing a “lot about little rather than very little about a lot”.
In Brazil, the Pictet group has an exclusive agreement with BTG Pactual – the biggest investment bank in Latin America – with the aim of exclusively distributing the investment strategy of “Pictet Global Megatrend Selection” to institutional investors, family offices, and affluent retail and Private Banking segments in Brazil.
“When interest rates were high in Brazil, with a strong currency (real) and a non-inflationary environment, there was no interest in investing abroad, but today with declining rates the Brazilian market begins to offer alternatives for those who seek to reduce their risk and diversify their portfolios, and may consider investing in funds which invest in assets located abroad”, says Rohner.
For each theme Pictet counts on a thematic advisory board which includes entrepreneurs, academics and specialists who help the fund managers better understand developments of each specific theme according to the megatrends.
“A Brazilian firm which is in our portfolio is Suzano. In the opinion of our managers, this company is one of the best kinds of company which we look for regarding sustainability and economic growth, two of 14 megatrends established by the Copenhagen Institute of Future Studies (CIFS). »
« One of the bigggest challenges facing our industry is how to access the new generation (millenials). Only a small number of millenials will inherit a large fortune and the decision of what to do with this fortune has changed over time, however, not all millenials will inherit a large fortune. » According to a study undertaken by the US Federal Reserve, in the US alone, annual inheritances and inter vivos gift receipt transfers averaged about $350bn (2016 dollars) per year in the period 1995 to 2016, which amounts to the same amount of total personal savings in the US. However, the bulk of these transfers is flowing to families that already have substantial resources. Almost 40% of the transfers go to the top 10% of income earners and only 20% goes to families in the bottom half. The same for wealth where 50% of the intergenerational transfer goes to the top 10% and only 8% to the bottom half.
«It is important to explain the importance of both — those that inherit as well as those who should save for their welfare in the future. An important objective of our thematic products is to offer financial alternatives with which people can identify with. In terms of profile, water, health or security are themes that everyone understands», says Rohner.
Father of 3 adult children, Rohner says that his days are long. “As I live near Montreux, 110km from the Bank, I wake up at five in the morning and I take the train to Carouge. In the morning, on the train, I prepare my day and on the return I use the time to read. To better manage the advisory thematic boards and ensure that they are also productive for the managers, I need to follow the ongoing developments of each theme. The external counsellors who participate in the meetings do so not only for the money so the meetings have to be interesting for them as well. The focus of the meetings is long term growth but we are also searching for knowledge and new insights into the trends tied to the growth of companies involved in these sectors. In addition, I have the goal of improving the narrative of each of these themes through the use of megatrends”, concludes Rohner.
By Daniela Mendez
Member, Board of Directors – CHamBR