DBS Private Bank raises over SGD 1.6 billion with "Barbell" and sustainable investment products
Singapore.16 Mar 2021
Newly launched Barbell Income Fund appeals to yield-hungry clients; draws SGD 970 million in less than six weeks
ESG Outperformance Trade hits record SGD 690 million amid growing appreciation for ESG investing
Singapore, 16 Mar 2021 - Two of DBS Private Bank’s flagship product innovations collectively raised over SGD 1.6 billion in assets under management (AUM), and achieved new highs in their respective fields. This comes amid stronger interest in sustainable investing, and demand for investment strategies that stand resilient even in volatile market environments.
They are namely the DBS Chief Investment Office (CIO) Barbell Income Fund (“Barbell Income Fund”), a newly released income fund that drew around SGD 970 million in less than six weeks; and the MSCI EM Asia ESG Leaders Outperformance Trade (“ESG Outperformance Trade”) which raised over SGD 690 million – a-seven fold jump from the original launch in 2018.
The strong reception to both products, designed in-house based on the bank’s conviction calls and managed in-house, attests to clients’ growing confidence in DBS Private Bank’s investment views and advisory, and its ability to position them for the future.
Barbell Income Fund: Addressing clients’ hunt for yield in a lower-for-longer environment
The Barbell Income Fund is the newest addition to the bank’s stable of investment products[1] that reference the DBS CIO Barbell Strategy Portfolio (“Portfolio”), which is unique to DBS as it mirrors the CIO’s high-conviction investment calls. As of 10 March 2021[2], this Portfolio has clocked a robust performance of 26% net of fees, outperforming the composite benchmark by close to 7%.
Launched this February to address clients’ need for income amid a lower-for-longer interest environment, the Barbell Income Fund was extremely well-received and raised close to SGD 970 million – bringing the total volume of discretionary assets under management[3] referencing the Portfolio to a new high of around SGD 4 billion.
The Barbell Income Fund is a multi-asset fund with a strategic asset allocation of 50% equities, 45% fixed income, and 5% cash, and aims to distribute 3 – 4% per year to investors via quarterly distribution. Unlike the DBS CIO Barbell Note, its capital appreciation-focused predecessor, the Barbell Income Fund seeks to generate yield through exposure to high dividend stocks, and employs covered call writing[4] on select growth stocks to extract additional income.
Hou Wey Fook, Chief Investment Officer at DBS Bank said, “We can expect rates to stay at ultra-low levels in the foreseeable future as a result of structural changes in global demographics, and the trend towards digitalisation. In this new normal, investors cannot rely on a traditional portfolio strategy that utilises bonds only – a more robust multi-asset strategy is better positioned to enhance portfolio yield, with covered calls serving as an added income stream. We’re heartened by our clients’ warm reception to the Barbell Income Fund, which suggests that they are cognisant of the situation, and trust us to navigate them through it.”
The underlying Portfolio employs a Barbell investment strategy: taking outsized exposures on income-generating assets such as corporate bonds and REITs on one end, and secular growth equities that ride on long-term, irreversible growth trends on the other. These include I.D.E.A. companies – the Innovators, Disruptors, Enablers, and Adapters that would thrive in a world that is fast-transforming into a digital economy. In addition to the Barbell Income Fund, investors can also participate in the Portfolio through the DBS CIO Barbell Note and the bank’s discretionary portfolio management service.
ESG Outperformance Trade: AUM surges seven-fold from 2018 tranche
Following the success of the first ESG Outperformance Trade, which was the first-of-its-kind in Asia when launched in 2018, DBS Private Bank rolled out a new tranche in October 2020[5].
In less than two months, the 2020 ESG Outperformance Trade raised over SGD 690 million, a whopping seven-fold jump from the SGD 95 million raised through the 2018 ESG Outperformance Trade. Data suggests that clients’ awareness and appreciation of the ESG investment proposition have become more widespread over time – as compared to 2018, there was a three-fold increase in the number of clients onboard the 2020 ESG Outperformance Trade, and the average amount invested per client more than doubled.
The ESG Outperformance Trade is a three-year outperformance warrant, designed to demonstrate that investing based on ESG principles improves portfolio risk-return characteristics and generates superior returns in the long-term. The 2018 Outperformance Trade, which is due to expire in November this year, has delivered an average return on investment of close to 100% till date since launch. Over 90% of invested clients have unwound their trades to book profits.
Joseph Poon, Group Head of DBS Private Bank said, “The strong take-up of our ESG Outperformance Trade was a pleasant surprise. While we did expect to see a jump in participation versus 2018’s, the final level of interest was unprecedented and exceeded our expectations. Our confidence in this trade was bolstered by the outperformance of the 2018 Trade, which supported our investment thesis that ESG-compliant companies do outperform in the long run; in addition, it also shows that our ongoing efforts in engaging and empowering clients to invest with an ESG lens is paying off. ESG is a key focus for DBS Private Bank, and we remain committed to spearheading its growth in Asia.”
DBS Private Bank has continually invested in helping clients to do good and do well, and has over the years introduced various education and engagement initiatives. These include being among the first banks in Asia to integrate MSCI ESG Ratings into its wealth product suite, enabling clients to make more informed investment decisions, and provides seamless access to a range of ESG offerings across funds, structured products and bonds. DBS Private Bank also connects clients with social enterprises supported by DBS Foundation, which is dedicated to championing social entrepreneurship in Asia, to identify opportunities for clients to help create positive impact.
[1] https://www.dbs.com/newsroom/DBS_Private_Banks_flagship_portfolio_hits_new_high_of_7_0pct_in_gains
[2] Since inception on 28 August 2019
[3] This includes AUM for the DBS CIO Barbell Income Fund and DBS CIO Barbell Note, as well as discretionary portfolio management AUM that participates in the DBS CIO Barbell Strategy Portfolio.
[4] ‘Covered call writing’ means to sell the right to purchase a stock that the Fund already owns at a specific price, within a specific time frame. E.g. In today’s market, when we write a 1- month call option on ‘Stock A’ at 10% above the current spot price (strike price), we are able to earn 1.4% in option premium. If the price of ‘Stock A’ does not rise above 10% in the month, it would remain in the Fund and in the process, earn 1.4% or an annualised 17%. If ‘Stock A’ trades above 10%, we are obliged to sell to the option buyer at the strike price. Premiums earned from call option writing on equity holdings provide an additional source of income to the Fund.
[5] https://www.dbs.com/newsroom/DBS_Private_Bank_relaunches_its_ESG_Outperformance_Trade_following_resounding_success
About DBS
DBS is a leading financial services group in Asia with a presence in 18 markets. Headquartered and listed in Singapore, DBS is in the three key Asian axes of growth: Greater China, Southeast Asia and South Asia. The bank's "AA-" and "Aa1" credit ratings are among the highest in the world.
Recognised for its global leadership, DBS has been named “World’s Best Bank” by Euromoney, “Global Bank of the Year” by The Banker and “Best Bank in the World” by Global Finance. The bank is at the forefront of leveraging digital technology to shape the future of banking, having been named “World’s Best Digital Bank” by Euromoney. In addition, DBS has been accorded the “Safest Bank in Asia” award by Global Finance for 12 consecutive years from 2009 to 2020.
DBS provides a full range of services in consumer, SME and corporate banking. As a bank born and bred in Asia, DBS understands the intricacies of doing business in the region’s most dynamic markets. DBS is committed to building lasting relationships with customers, and positively impacting communities through supporting social enterprises, as it banks the Asian way. It has also established a SGD 50 million foundation to strengthen its corporate social responsibility efforts in Singapore and across Asia.
With its extensive network of operations in Asia and emphasis on engaging and empowering its staff, DBS presents exciting career opportunities. For more information, please visit www.dbs.com.
They are namely the DBS Chief Investment Office (CIO) Barbell Income Fund (“Barbell Income Fund”), a newly released income fund that drew around SGD 970 million in less than six weeks; and the MSCI EM Asia ESG Leaders Outperformance Trade (“ESG Outperformance Trade”) which raised over SGD 690 million – a-seven fold jump from the original launch in 2018.
The strong reception to both products, designed in-house based on the bank’s conviction calls and managed in-house, attests to clients’ growing confidence in DBS Private Bank’s investment views and advisory, and its ability to position them for the future.
Barbell Income Fund: Addressing clients’ hunt for yield in a lower-for-longer environment
The Barbell Income Fund is the newest addition to the bank’s stable of investment products[1] that reference the DBS CIO Barbell Strategy Portfolio (“Portfolio”), which is unique to DBS as it mirrors the CIO’s high-conviction investment calls. As of 10 March 2021[2], this Portfolio has clocked a robust performance of 26% net of fees, outperforming the composite benchmark by close to 7%.
Launched this February to address clients’ need for income amid a lower-for-longer interest environment, the Barbell Income Fund was extremely well-received and raised close to SGD 970 million – bringing the total volume of discretionary assets under management[3] referencing the Portfolio to a new high of around SGD 4 billion.
The Barbell Income Fund is a multi-asset fund with a strategic asset allocation of 50% equities, 45% fixed income, and 5% cash, and aims to distribute 3 – 4% per year to investors via quarterly distribution. Unlike the DBS CIO Barbell Note, its capital appreciation-focused predecessor, the Barbell Income Fund seeks to generate yield through exposure to high dividend stocks, and employs covered call writing[4] on select growth stocks to extract additional income.
Hou Wey Fook, Chief Investment Officer at DBS Bank said, “We can expect rates to stay at ultra-low levels in the foreseeable future as a result of structural changes in global demographics, and the trend towards digitalisation. In this new normal, investors cannot rely on a traditional portfolio strategy that utilises bonds only – a more robust multi-asset strategy is better positioned to enhance portfolio yield, with covered calls serving as an added income stream. We’re heartened by our clients’ warm reception to the Barbell Income Fund, which suggests that they are cognisant of the situation, and trust us to navigate them through it.”
The underlying Portfolio employs a Barbell investment strategy: taking outsized exposures on income-generating assets such as corporate bonds and REITs on one end, and secular growth equities that ride on long-term, irreversible growth trends on the other. These include I.D.E.A. companies – the Innovators, Disruptors, Enablers, and Adapters that would thrive in a world that is fast-transforming into a digital economy. In addition to the Barbell Income Fund, investors can also participate in the Portfolio through the DBS CIO Barbell Note and the bank’s discretionary portfolio management service.
ESG Outperformance Trade: AUM surges seven-fold from 2018 tranche
Following the success of the first ESG Outperformance Trade, which was the first-of-its-kind in Asia when launched in 2018, DBS Private Bank rolled out a new tranche in October 2020[5].
In less than two months, the 2020 ESG Outperformance Trade raised over SGD 690 million, a whopping seven-fold jump from the SGD 95 million raised through the 2018 ESG Outperformance Trade. Data suggests that clients’ awareness and appreciation of the ESG investment proposition have become more widespread over time – as compared to 2018, there was a three-fold increase in the number of clients onboard the 2020 ESG Outperformance Trade, and the average amount invested per client more than doubled.
The ESG Outperformance Trade is a three-year outperformance warrant, designed to demonstrate that investing based on ESG principles improves portfolio risk-return characteristics and generates superior returns in the long-term. The 2018 Outperformance Trade, which is due to expire in November this year, has delivered an average return on investment of close to 100% till date since launch. Over 90% of invested clients have unwound their trades to book profits.
Joseph Poon, Group Head of DBS Private Bank said, “The strong take-up of our ESG Outperformance Trade was a pleasant surprise. While we did expect to see a jump in participation versus 2018’s, the final level of interest was unprecedented and exceeded our expectations. Our confidence in this trade was bolstered by the outperformance of the 2018 Trade, which supported our investment thesis that ESG-compliant companies do outperform in the long run; in addition, it also shows that our ongoing efforts in engaging and empowering clients to invest with an ESG lens is paying off. ESG is a key focus for DBS Private Bank, and we remain committed to spearheading its growth in Asia.”
DBS Private Bank has continually invested in helping clients to do good and do well, and has over the years introduced various education and engagement initiatives. These include being among the first banks in Asia to integrate MSCI ESG Ratings into its wealth product suite, enabling clients to make more informed investment decisions, and provides seamless access to a range of ESG offerings across funds, structured products and bonds. DBS Private Bank also connects clients with social enterprises supported by DBS Foundation, which is dedicated to championing social entrepreneurship in Asia, to identify opportunities for clients to help create positive impact.
[1] https://www.dbs.com/newsroom/DBS_Private_Banks_flagship_portfolio_hits_new_high_of_7_0pct_in_gains
[2] Since inception on 28 August 2019
[3] This includes AUM for the DBS CIO Barbell Income Fund and DBS CIO Barbell Note, as well as discretionary portfolio management AUM that participates in the DBS CIO Barbell Strategy Portfolio.
[4] ‘Covered call writing’ means to sell the right to purchase a stock that the Fund already owns at a specific price, within a specific time frame. E.g. In today’s market, when we write a 1- month call option on ‘Stock A’ at 10% above the current spot price (strike price), we are able to earn 1.4% in option premium. If the price of ‘Stock A’ does not rise above 10% in the month, it would remain in the Fund and in the process, earn 1.4% or an annualised 17%. If ‘Stock A’ trades above 10%, we are obliged to sell to the option buyer at the strike price. Premiums earned from call option writing on equity holdings provide an additional source of income to the Fund.
[5] https://www.dbs.com/newsroom/DBS_Private_Bank_relaunches_its_ESG_Outperformance_Trade_following_resounding_success
[END]
About DBS
DBS is a leading financial services group in Asia with a presence in 18 markets. Headquartered and listed in Singapore, DBS is in the three key Asian axes of growth: Greater China, Southeast Asia and South Asia. The bank's "AA-" and "Aa1" credit ratings are among the highest in the world.
Recognised for its global leadership, DBS has been named “World’s Best Bank” by Euromoney, “Global Bank of the Year” by The Banker and “Best Bank in the World” by Global Finance. The bank is at the forefront of leveraging digital technology to shape the future of banking, having been named “World’s Best Digital Bank” by Euromoney. In addition, DBS has been accorded the “Safest Bank in Asia” award by Global Finance for 12 consecutive years from 2009 to 2020.
DBS provides a full range of services in consumer, SME and corporate banking. As a bank born and bred in Asia, DBS understands the intricacies of doing business in the region’s most dynamic markets. DBS is committed to building lasting relationships with customers, and positively impacting communities through supporting social enterprises, as it banks the Asian way. It has also established a SGD 50 million foundation to strengthen its corporate social responsibility efforts in Singapore and across Asia.
With its extensive network of operations in Asia and emphasis on engaging and empowering its staff, DBS presents exciting career opportunities. For more information, please visit www.dbs.com.
