Stockholm (NordSIP) – As part of its continued focus on the Nordic region, UBS Asset Management (UBS AM) announced Virgilio Zaldivar has joined the Swiss firm as Head of Nordics Institutional Client Coverage at the beginning of April. In his new role, Zaldivar will be responsible for creating long-term collaborative partnerships with the Nordic institutional investors. He joins from MSCI, where he worked for 12 years, most recently as Executive Director within the Client Coverage team for the Nordics.
Focusing on Investor Needs
Describing his new role, Zaldivar explains that “the focus is on understanding their investment needs, providing high-quality investment solutions and ultimately, adding value to the end beneficiaries and owners of the assets (i.e. people’s savings and pensions).”
“I am very passionate about the idea of contributing to a better future for the generations that are yet to retire.” Zaldivar argues UBS Asset Management is well-positioned to make a difference thanks to two competitive advantages. “First, the firm is staffed by extremely talented people. Second, it has a platform of high-quality investment solutions with ESG at the core of its DNA. I look forward to working with these two highly valuable ingredients in order to make an impact in the Nordics investment community.”
UBS AM’s new Head of Nordic Institutional Client Coverage will work closely with Florian Cisana, Head UBS ETFs & Index Funds Strategic Markets EMEA at UBS AM. “ETFs and other passive solutions are an important part of providing high-quality investment solutions where Florian and I will collaborate closely to bring the best suite of products to the investment community. In addition to the Institutional and ETF & Index Funds teams, we have a strong team looking after the Wholesale distribution business in the Nordics lead by Erik Carell with whom we also collaborate very closely to service this market,” Zaldivar tells NordSIP.
The Appeal of Nordic Investors
As someone with 10 years of experience in the Nordics, Zaldivar is particularly well-placed to discuss the preferences of local investors and their evolution over the last decade. “The Nordic region is a market that has always fascinated me because the participants are very sophisticated investors. From retail to institutional investors, the level of sophistication and understanding of the financial markets and investment strategies is very high,” he explains.
“In addition, this is a region that has always been very committed to sustainability and climate change awareness and, since I have been involved in the region at least, the investment community has actively considered these elements in their investment processes,” he says. “Zooming-in to the institutional space, asset allocation processes have evolved from pure asset-class allocation decisions to a more risk-class and factor-driven type of asset allocation which provides a clearer picture of the risk and performance drivers of their complex portfolios.”
Zaldivar also notes that institutional investors have identified that ESG investing not only has an impact from a social and environmental performance, “it also has positive financial implications to the returns of their portfolios due to the financial causality of these themes.” As a result, he notes that “there is no such thing as ‘ESG Investing’ in the region – but rather ESG and sustainability are core central elements of any investment process.”
Sustainable Investing Challenges
Going forward, Zaldivar sees two challenges plaguing sustainable investors. First, he echoes the pervasive concern about data collection, particularly in private markets.“With yields being low, investors are forced to look for alternative sources of attractive risk-adjusted returns in non-traditional asset classes such as private and real assets. Given the nature of these assets, it is challenging to source relevant ESG research and data which in turn results in further challenges when measuring and monitoring the ESG profile of an entire multi-asset class fund plan,” Zaldivar explains. “Fortunately, research houses and content providers understand the value of increasing data coverage and therefore are continuously focusing on improving their offerings. Furthermore, research providers are deploying powerful technology such as artificial intelligence (AI). Therefore, soon we should expect these data coverage issues to be a problem of the past.”
The second challenge he highlights is related to the management and alignment of short-term risk to the overall investment strategy. “While effectively integrating ESG in the investment strategy has proven to result in a long-term enhanced portfolio risk and return profiles, such portfolios may still suffer from short-term and cyclical market dynamics that on the surface may appear to be due to the portfolio’s ESG related tilts which may breach certain risk limits temporarily. Fortunately, these institutional investors have a long-term investment horizon and there are cost effective tools and instruments to manage short-term risk and keep the risk profile in line within budgets,” Zaldivar concludes.
Image Courtesy of Virgilio Zaldivar
