Swiss private bank Union Bancaire Privée discusses key trends reshaping the industry and how it is positioning itself in the current market environment, as well as where it sees investment opportunities.

At a media event in London, Philippe Lespinard, head of asset management in London at Union Bancaire PrivĂ©e (UBP) recently discussed  how investing in biodiversity will be a key theme for the next decade.

Biodiversity, which is the variety of life on earth from genes to ecosystems, plants and animals, is currently in crisis, UBP said. Seventy-five per cent of the world’s food depends on animal pollination and 70 per cent of cancer drugs are inspired by nature. Key figures show that there has been a 68 per cent drop in wildlife in the last 46 years, and 10 million hectares of land deforested each year, the bank said.

Climate change and biodiversity are inextricably linked, with 24 per cent of global emissions due to food, agriculture and land use. However, there is increasing investor interest in tackling climate change and focusing on regenerative agriculture, the bank said. The size of the investment opportunity relies on three factors: demand, regulation and innovation.

UBP recently launched UBAM – Biodiversity Restoration Fund which aims to protect, restore and perform. It has thematic exposure to listed providers of biodiversity protection and restoration and aims to generate positive returns whilst enhancing the protection and restoration of the natural world.

For instance, regenerative farming practices lead to improved soil health and a reduction in carbon emissions, the bank continued. Precision farming can also lead to about a 40 per cent reduction in pesticide use whilst maintaining yields, helping the world to produce more food using fewer resources to feed a growing population.

As the move towards a sustainable food and agriculture grows, other investment managers, such as London-headquartered M&G Investments, has also just made a new investment in regenerative farming to help drive environmental changes in sustainable production in Europe. Karen Miki Behr at Newton Investment Management, a subsidiary of BNY Mellon Investment Management, also recently highlighted the importance of precision agriculture to optimise crop productivity, enabling farmers to target their fertiliser application more precisely. She expects adoption of the technology to accelerate in the future. See more here, here and here. 

Regulation such as the European Commission's Farm to Fork strategy which aims to provide food security while reducing the environmental impact of primary production and halting biodiversity loss plays a key role too, UBP said.

Positive stance on Japanese Equities
Lespinard also highlighted at the media event how the firm favours Japanese equities, and that they have been in the market for some time. Equities remain UBP’s core holdings with preferences for technology and Japan. â€śIn 2024, Japan is offering premium, secular earnings' growth over European and emerging market equities,” MichaĂ«l Lok, group CIO and co-CEO asset management at UBP, said. â€śLook to software for earnings' growth and attractive valuations. For more cautious investors, rising volatility offers opportunities to generate equity-like returns via volatility strategies,” he added.

Other wealth managers, such as BNY Wealth Management, are also positive about Japanese equities in 2024. German asset manager DWS' top pick for Asia is Japan, both from a valuation perspective and in terms of earnings' growth, and it believes that Japanese equities are a good way of benefiting from China's growth opportunities. See more here and here.