"The important thing to note about thematic investing is to have a long-term mindset. If a short-term perspective is taken on performance versus the MSCI ACWI - for example, the whole world index - that can sometimes ebb and flow in the short term. But if you believe in the long-term trend, you will be rewarded as an investor over the long term, but you should be willing to stick and stay the course.
"I'm not promising that all thematic investing will give you that kind of return differential, but they are themes. And by definition, themes have megatrends underpinning them for many, many years and decades. And that's how we do it," he stresses.
The MSCI ACWI captures large and mid-cap representation across 23 developed markets and 24 emerging markets.
According to Sagayam, the megatrends observed in the next five years are the rise of Asia, private markets, debt sustainability, cyber safety, exponential productivity, instant finance, responsible capitalism and geopolitical fragmentation.
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"Everyone talks about deglobalisation, but actually the benefit of deglobalisation is stronger regionalisation. Asia is a superpower that is becoming increasingly intertwined from a macroeconomic perspective and even less dependent on the West in many aspects. In the past five years, in addition to servicing our clients in Asia, we [have been] servicing clients in the West who wanted Asian exposure through financial products," he says.
Toward that end, Pictet will sharpen its focus on its Asian business as its clients here look to diversify their exposure away from home markets where they are already heavily exposed to bonds and equities.
"To a significant extent, they do have big exposure to US equities. So I don't see a strong trend to necessarily increase that, but the appetite for global products is still high.
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"What I noticed also very recently is strong interest in the eurozone and European products. I think there is a watershed moment in Europe, which could spell many years of strong investing from global investors, including Asian investors into Europe. It serves two things: It helps Asian investors diversify away from Asia and also diversify away from an overweight allocation to the US and US assets," Sagayam adds.
Having said that, he highlights that Pictet's Asian investors are still showing an appetite for pan-Asian products, including private assets, which is another very strong secular trend.
"Private assets is an area that most investing communities globally - not only Asian investors - are still relatively under-allocated to. But given the return profile, which is very interesting, and given the growth of those markets, they also want private market exposure through real estate, private equity and private debt.
"Private markets are now increasingly becoming a core allocation, and I believe [they] will be a permanent feature in most investment portfolios, not just tactical ones, especially for investors who are happy to take a longer-term perspective on the allocation and growth," he opines.
Through Pictet Alternative Advisors, the group manages close to US$40 billion ($52.6 billion) in assets in the alternative space, largely through private equity, real estate and hedge funds.
Debt sustainability is another area investors should take note of, says Sagayam.
"The US is now at a post-World War II high in terms of debt-to-GDP. This cannot go unnoticed. This debt needs to be refinanced. In fact, a large amount of that debt is in the form of short-duration debt bills that constantly need investors to be willing to refinance that.
"It's now the same in the eurozone. We've just seen the huge fiscal news announced in Germany. That is a watershed moment, not only for Germany but also for the eurozone, in terms of going to the next level of fiscal expansion, not only for defence but also for infrastructure. Ultimately, I think this will be very good to support a re-industrialisation in Europe," he says, cautioning that high debt levels will have consequences on investment outcomes and decisions when higher taxation is implemented to fund and finance the debt.
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Sagayam also sees active exchange-traded funds (ETFs) gaining more traction globally as the younger generation of investors seeks more transparency and information when making investment decisions.
"Funds are increasingly becoming tokenised and potentially on-chain in the future. I think these developments will manifest over the next five years," he adds.
A 220-year history with purely organic growth
This year marks the 220th anniversary of Pictet Group, which had over CHF724 billion ($1.15 trillion) in assets under management and custody as at end-2024. It is the second-largest financial institution in Switzerland behind UBS, and one of the oldest and largest privately owned European banks.
Over the years, the group has never grown by acquisitions, relying instead on organic growth. It believes that by remaining a private entity, there will be no pressure to generate short-term profits, hence allowing it to make long-term decisions based on megatrends.
"We've had several financial crises - not only the Asian financial crisis when I started my career, and that was a big wake-up call for me, but also the global financial crisis. Pictet's growth is almost like a 45-degree line, with very few blips, because as an institution, we will never overextend ourselves when the markets are on fire and when the markets are challenging. We also don't need to cut aggressively, so we are able to stay the course," explains Pictet Group managing partner and Pictet Asset Management co-head Raymond Sagayam.
Currently, Pictet has six offices in Asia - Tokyo, Osaka, Singapore, Hong Kong, Taipei and Shanghai.
"In Asia (ex-Japan), we've gone from just over 200 employees to more than 400 now in the space of 10 years. If you add Japan, there are another 130 individuals there. That's about 500-plus. This has all happened organically and slowly because we're a private firm, [so] when we make decisions, we commit for decades, not for years or months," he says.
In 2024, Pictet recorded a consolidated profit of CHF655 million, up from CHF577 million a year ago. Pictet is majority-owned and managed by seven managing partners, including Sagayam. Its senior management consists of 47 equity partners.
Sagayam assumed the role of managing partner in January 2024, making him the group's 47th managing partner in its 220-year history. He has more than 25 years' industry experience, with a focus on fixed-income investing across all major geographies.
He joined Pictet Asset Management (Pictet AM) in 2010 as the head of total return fixed income to build and expand the firm's long-short credit capabilities. He was named chief investment officer of fixed income for Pictet AM in 2017, as well as the equity partner of the group in 2018 and head of Pictet AM London in 2022.
Prior to joining Pictet, he was managing director of Swiss Re Asset Management in London.
Sagayam grew up in several locations, including Washington, Kuala Lumpur, Beijing, Singapore and London.
"My father was a Malaysian diplomat representing our embassy abroad in many different countries. I was born in [the US], and after that, he was posted back to Malaysia. So we were here for a couple of years. Then, we were in Beijing, China and Singapore.
"We ended up settling in the UK, and I've lived there for the majority of my life. But I would say that my heart, my link and my connection with Asia, particularly Malaysia and Singapore, have always burned very strongly," he shares.
Going forward, Pictet is looking to develop partnerships with Malaysian banks to distribute its products to the banks' clients here.
Asked if Pictet would consider setting up an office in Kuala Lumpur, Sagayam says: "I think the decision to set up an office is not one that we take lightly. Just across the Causeway, we have an office that has been in place for 30 years, and it allows us to serve our clients adequately.
"But of course, depending on the direction of our growth, that answer may be different. If you ask me that in five or 10 years' time, I hope it's different, but I also hope that Malaysian institutions will see Pictet truly for what it is - the ideal partner commensurate with Malaysian values," he says.
Malaysia, alongside Singapore and Thailand, are the three largest Southeast Asian markets for Pictet's asset management business.
