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Sunday, 8 June 2008

Banker's 3Rs: review, realign, rebalance

Take charge of your money and get out fast if need be, says OCBC private banking head Olivier Denis

By Lorna Tan Finance Correspondent

If you peep into the wallet of OCBC Bank's private banking head, Mr Olivier Denis, you will find only two credit cards. This is far fewer than the four to six that most Singaporeans hold.

The Frenchman and Singapore permanent resident prefers to keep just two cards because he is a 'points junkie'. He said: 'I try to put every single dollar on my card to accumulate points that I can convert them into Krisflyer miles and redeem flights.'

He manages his investment portfolios even more aggressively because he feels long-term passive buy- and-hold investment strategies are 'no longer relevant under current market conditions'.

'The world is changing at an accelerated pace and the financial market is no exception. Investors need to actively and dynamically engage and manage their portfolios. As the markets are volatile now, they must regularly rebalance their portfolios and realign their strategies to market situations.'

His portfolios are all short-term, and he reviews and rebalances them every month as the need arises. For instance, if the Aussie dollar depreciates, he will immediately stop holding cash in that currency.

Mr Denis has more than 20 years' experience in wealth management and private banking. He was in charge of the Singapore market at American Express Bank before joining OCBC Private Bank in September 2006.

He is no stranger to Asia, having lived in this region for the first 17 years of his life. He has been in Singapore for seven years and worked in Asia for 13.

He recalled how thrilled he was when presented with the opportunity to manage OCBC Private Bank. After all, OCBC was the first Singapore bank to introduce private banking in the Republic.

'Having spent most of my life in Asia, I see great synergy in my move as I understand the culture, behaviour and investment mindset of Asian clients.'

Mr Denis, 49, is married to Frederique, 45. They have two sons, Archibald, 17, and Constantin, 14.

Q: What are your money habits?
I earn and save while my family spends it for me! Jokes aside, I do not spend on unnecessary items. I make it a point to pay my bills on time, via direct debit or Giro through my account.

Q: What financial planning have you done for yourself?
I adopt a currency and an investment strategy. Both are flexible and I can rebalance at any point by changing the mix. I also ensure that my investment strategy has no currency exposure as I prefer to manage it on my own. A 20 per cent return can be wiped out in no time by currency movements.

I currently have investments in Singdollars, euros, Aussie dollars and US dollars. I keep the Aussie dollars in cash as interest rates are high; the euros are in market-neutral funds; the US dollars are in commodity futures and private banking products; and the Singdollars are in a variety of Asian equities and Asian funds.

At this point, the United States doesn't have the right indicators for market growth, but there are some tactical opportunities. Asia is the world's engine economically, so it has lots of potential to grow. That's why I go 'long' into Asian equities and funds. Europe has no clear trends, so I'm market-neutral there.

Q: What kind of returns are you aiming for?
I manage the risk-return ratio very carefully by minimising the potential downside before looking at the potential upside. The returns range from 10 to 15 per cent a year. Anything more is a bonus.

Q: What about insurance planning?
As a French national, I contribute 20 per cent of my pay to schemes under France's statutory retirement system. It covers my insurance needs. In a few years, I might invest in a Universal Life plan for my two boys.

Q: Any other investments?
I have a 0.5ha family property in France. To me, property is for personal use and not so much for investment. I leave property-related investments to professional developers. I am looking at one property in Singapore but I'm waiting for the market to correct.

I invest in wine but purely for personal consumption. Having a nice wine cellar is part of the French culture and tradition. My collection is meant to be enjoyed with friends and family, not transacted.

Q: Moneywise, what were your growing-up years like?
I lived in Asia till I was 17. I was the eldest in a family of five. I remember staying in a big house. My father worked for a French civil engineering firm before he became the Asian head of a French bank.

You can imagine, after the expat lifestyle I enjoyed growing up, the shock I suffered at boarding school in France. The other students and I were practically from different planets, but it was a good reality check.

Q: How did you get interested in investing?
During my college years in France, I was part of an investment club. Every student contributed to a fund that the club invested in European equities. The club provided regular reports on the fund's performance.

Q: What has been a bad investment?
The apartment I bought in Paris in 1982 - my one attempt at property investment. I did not make any returns and my capital was locked up for five years. After inflationary adjustments, I actually lost money.

Q: Your best investment to date?
Deciding to live and work in Singapore. Living here is a privilege we sometimes take for granted. Where else can you get this quality of life? If you want to balance your work, quality of life and family, there are not many places that can offer such a good package.

Q: Any investment tips for the man in the street?
Don't invest in or buy products you don't fully understand. Don't try to out-smart the market. Investment is about adopting a disciplined approach based on your strategy and risk appetite. It is not about listening to rumours or timing the market.

Q: What's your retirement plan?
I'll spend my summers in the south of France and winters in Singapore. The rest of the time, I'll travel in Asia, where I still have so much to discover even after 28 years in the region.

Q: And your home now is...?
I live in an apartment in the East Coast.

Q: And your car is...?
A black BMW 5 series.

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