Raffles Family Office – Investment Outlook 2024

Tower of Strength: Building a Portfolio for a Shifting 2024 Market

Key highlights:

  • Maintaining a 4D Approach: It remains paramount to adopt a strategy that is diversified, defensive, durable, and dynamic.
  • Expectations point towards a gradual decline in U.S. core inflation, with a likelihood of it falling below 3% by the close of 2024, while central banks are actively grappling with the Goldilocks dilemma in response.
  • Fixed Income: Within the high-yield sector, the emphasis is shifting towards credit selection as a more influential driver of performance. A more favorable outlook is emerging for bond returns.
  • Listed Equities: For the U.S. market, sectors poised for potential outperformance include healthcare, consumer durables, and technology. In the context of China and Hong Kong, attention should be directed towards market leaders in the electric vehicle, travel, utilities, and technology sectors. Japanese equities are recovering from cyclical downturns, particularly in sectors like IT and communications, and household electrical appliances.
  • Private Equity: Anticipate the emergence of most unicorns in the fields of AI and semiconductors, particularly within the AI and high-performance computing space. Additionally, it’s advisable to monitor sectors such as renewable energy transition, education, and healthcare.
  • Digital Assets: Innovative scaling and improved interoperability capabilities will also drive significant growth in areas like DeFi, DePIN and decentralised storage. This growth will facilitate peripheral product offerings for further diversified investment opportunities for the industry
  • Real Estate: Continues to offer inflation hedge and 2024 to be “vintage” year for buyers.
  • Structured investments: Fixed Coupon Notes (FCNs) with guaranteed coupons and knock-out features continue to be favored. For non-flow products, it is highly recommended to consider rate-linked derivatives to secure the current high-rate offerings.

Macro Outlook

In 2023, the financial markets witnessed a series of significant events. So before delving into the outlook, let’s review some of the key events that transpired in 2023 – these serve as critical touchpoints in understanding the evolving investment landscape as we look ahead.

  • Banking Sector Turmoil: In 2023, the financial sector experienced significant turbulence, exemplified by the high-profile merger of Credit Suisse with UBS in March. Simultaneously, several U.S. banks, including Silvergate Bank, Silicon Valley Bank, and Signature Bank, faced bankruptcy, contributing to an environment of uncertainty.
  • Geopolitical Unrest: Against the backdrop of financial market developments, the ongoing Russia-Ukraine conflict remained a prominent geopolitical concern throughout the year.
  • Interest Rate Hikes: A noteworthy financial market trend was the consistent increase in interest rates. The Federal Funds rate surged four times year-to-date, culminating at 5.5%, impacting investment strategies and asset allocation.
  • Supply Chain Disruptions: The fragmentation of global supply chains persisted, exacerbating inflationary pressures and posing challenges to businesses reliant on these networks.
  • U.S.-China Relations: The year marked a measured but discernible deterioration in U.S.-China relations, with potential ramifications for global trade and investments.
  • China’s Property Sector: China’s property sector faced a protracted crisis, casting a shadow on the broader economic landscape.
  • Border Reopening Realities: Optimism surrounding the reopening of the China border proved to be overly optimistic, highlighting the complexity of international trade dynamics.
  • Israel-Palestine Conflict: On October 7th, Israel’s announcement of its conflict with Palestine underscored the persistent geopolitical volatility in the Middle East.
  • Bond Yield Peaks: Bond yields reached their highest levels in over 15 years, reshaping the fixed-income investment landscape.
  • AI Industry Milestone: In a landmark development, the first trillion-dollar artificial intelligence company emerged, underlining the transformative potential of this sector.
  • Resilient U.S. Economy: Notably, the U.S. economy demonstrated resilience, defying expectations by maintaining its strength even in the face of significant interest rate hikes.

The “post-pandemic new normal”, as we at Raffles Family Office would term it, presents a multifaceted environment characterized by transitions from deflation to inflation, geopolitical tensions and alliances, rapid technological advancements, climate change considerations, and the ongoing transformation of supply chains. To thrive in this setting, it will be paramount to stay diversified, defensive, durable and dynamic (“4Ds”).

In our outlook for 2024, we anticipate a trend of disinflation across the United States (“U.S.”) and Europe. While the normalization in both product and labor markets has progressed significantly, its full disinflationary impact is still unfolding. We expect that core inflation will gradually decline, likely falling below 3% by the end of 2024.

While we expect a slowdown but no significant contraction in the U.S., we do see only limited recession risk in the U.S. next year. We expect several tailwinds to global growth in 2024, including strong real household income growth, a smaller drag from monetary and fiscal tightening, a recovering in manufacturing activities, and an increased willingness of central banks to deliver insurance cuts if growth slows.

The market outlook is marked by volatility and complexity, driven by compressed risk premia and well-priced markets based on our analysis. In 2024, we expect returns in equities, fixed income, private equity (PE), digital asset, real estate to out perform cash. Each offers protection against a different tail risk, emphasizing the importance of a balanced asset mix to replace the cash-focused approach of 2023..Additionally, we see a greater role for duration in portfolios and suggest considering structured products both to enhance portfolio returns and as part of risk management tools.

Fixed income investors will take confidence from central banks pausing at their most recent meetings. We recommend lengthening duration ahead of the Fed rate cuts in 2024, which may weigh on cash returns but should benefit bonds.

As for listed equities, given the extreme low valuation in Hong Kong and Mainland China,growth leaders are to be found in the service consumption, internet, and electric vehicle sectors.

As we navigate the market after significant repricing over the past 24 months, the emphasis remains on portfolio rebalancing and deploying cash into quality assets to optimize returns in this evolving landscape. Amid low growth and a policy rate plateau, a prudent approach involves putting cash to work in quality assets such as equities, fixed income, private equity, digital assets, and real estate. Diversifying sources of return and income is essential to enhance return potential and manage portfolio volatility effectively.

Asset Allocation

In the wake of diminishing stimulus support and elevated federal reserve rates, we anticipate a consequential decline in corporate balance sheets and slower economic growth heading into 2024. Contrary to prior expectations, the prevailing norm of ultra-low or declining interest rates is foreseen to be an unlikely fixture in the coming decade unless another black swan event occurs. This shift is poised to usher in challenging times for corporate profits, asset appreciation, borrowing, and default avoidance. In other words, this points towards a fundamental shift in the macroeconomic regime in which one should not presume that strategies effective since 2009 will remain equally viable in the years ahead. As we delve into the specific portfolio implications (see Fig. 1), investors are urged to exercise prudence in adapting their approaches to navigate the complexities that lie on the horizon.

Fig.1. Portfolio Asset Allocation 2024

Given a “higher for longer” environment as the base assumption and where the potential for equity-like returns on bonds is discernible (see Fig. 2), we have identified the following investment themes to strategically capitalise on this dynamic. Firstly, we reiterate our preference for companies boasting profit growth, resilient profit margins, and strong balance sheets to weather the rising cost of debt. This is not only a risk mitigation strategy but also to position investors to harness the potential for capital appreciation unlike credit investments. Additionally, we recognise the transformative power of big data and artificial intelligence in sustaining competitive advantages across a broad range of sectors—a facet crucial to maintaining a robust moat in today’s fast paced business milieu.

Fig. 2. J.P. Morgan Long-Term Capital Market Assumptions 2024

While traditional diversifiers such as stocks and bonds play crucial roles in managing economic uncertainties, they also exhibit vulnerabilities during specific market conditions. Bonds, a stalwart in portfolio diversification, have shown limitations in addressing inflationary pressures in 2023. The recognition that financial markets can be subject to various shocks has thus led to the expansion of the diversification toolkit. Alternative assets, notably real estate, hedge funds, and private credit, have emerged as pivotal components (see Fig. 1). These alternatives possess attributes such as low correlation to traditional assets, offering a shield against diverse market shocks. Moreover, they present opportunities for downside resilience, enhanced returns, and inflation protection, rendering them integral in fortifying portfolios against an increasingly complex and unpredictable financial market.

Digital assets also play an increasingly pivotal role in modern asset allocation strategies. Their inclusion in portfolios is often driven by the desire for enhanced diversification and exposure to low correlated returns which can serve as a partial hedge against market downturns. While investors are drawn to the potential for high returns, we remain cautious about the inherent volatility and risk associated with these assets. However, due diligence is paramount, and the evolving regulatory landscape, technological developments, and market dynamics necessitate a nuanced approach to integrating digital assets into a well-balanced asset allocation strategy. As the digital asset ecosystem continues to mature, we are increasingly considering these assets as a strategic component.

In conclusion, the year 2024 is anticipated to present increased challenges compounded by uncertainties related toa gradual slowing of economic growth, geopolitics, and potential policy missteps. In order to navigate these intricacies—whether through income streams or capitalising on structural trends—a carefully considered asset allocation is imperative for investors. The crucial aspect lies in ensuring that portfolio construction is not only aligned with the core scenario but is also resilient to various contingencies that may arise. Achieving this level of preparedness necessitates a departure from reliance on a single asset class but on a cerebral and well-diversified portfolio.

Fixed Income

Growth in the U.S. is expected to moderate due to the lagged effects of higher interest rates. Absent a recession, inflation is expected to decline further, likelyretreatingto below 3% by the end of 2024. In the central scenario of inflation below 3% but above 2%, the Fed likely refrains taking further strong tightening action but keeps policy modestly restrictive. There are risks on either side of this outlook. On one side, inflation could prove stickier than expected, forcing interest rates even higher still—this this scenario would result inbonds and credit continuing to underperform cash. Positive productivity shocks could also support higher rates, which would also mean bond underperformance, but without much downside to credit. Late next year, U.S. elections could result in a more fiscally expansionary outcome, another potential catalyst for higher yields. On the other side, a recession/sharp growth slowdown or a faster-than-expected decline in inflation would drive a more favourable outlook for bond returns.

At current levels, bond yields are likely to be competitive against cash even if the extent of policy easing currently priced for 2024 does not materialize. Transition to a lower rates volatility regime may encourage inflows after the steep pace of policy rate hikes during 2022-2023. Higher coupons also offer insurance value in case of an unanticipated downturn. Overall, the return outlook for owning bonds on a risk-adjusted basis is more favourable, or at least balanced, in 2024 than the previous year.

Emerging markets growth is expected to hold up despite near-term deceleration in China, which faces myriad economic headwinds, in particular a prolonged property sector downturn. China policymakers are expected to provide fiscal and other support to help stabilize housing activity at lower levels and to boost other areas of investment. For most other EMs, any spillovers from China weakness should be manageable, given that property investment has less import content than most other forms of activity. Separately, given increased efforts on supply chain diversification, EM Asia ex-China – particularly South and Southeast Asia – may receive a larger share of FDI inflows going forward.

The prospect of “higher for longer” rates means a more persistent drag on growth from tighter financial conditions. For corporate issuers, a higher-for-longer rates environment, coupled with sluggish earnings growth, will continue to challenge the economics of deploying and maintaining high levels of leverage on balance sheets. Primary activity will likely remain focused around refinancing activity rather than leveraged transactions such as debt-funded M&A and share buybacks. Defaults will likely increase as the absence of any relief on funding costs incentivizes issuers with over-leveraged and rates-sensitive balance sheets to strategically default. Demand for low-quality and over-leveraged issuers is poised to weaken in 2024. Fundamentals will gain the upper hand on technicals, making credit selection a more important performance driver within the high-yield sector.

Listed Equities

In 2024, investors will need to tread cautiously to navigate a fragmented economic outlook. Central bankers are faced with a Goldilocks dilemma of treading a fine line, tampering with inflation without triggering a recession. Current consensus is for the U.S. Fed to maintain a hawkish pause over the earlier part of 2024 until there is sufficient comfort inflation is under control. Risks to global growth, driven by the lagged effects of the “higher for longer” narrative on interest rates and possible corporate earnings headwinds as a result of steep financing costs and slowing economic growth, will likely become a drag on global equities in 2024. Notwithstanding, uncertainties from geopolitics is expected to remain elevated with little signs of easing. Markets are also pricing in a soft-landing scenario that leaves little margin for error with regards to valuations should there be a different outcome. In this regard, the risk-reward for equities in 2024 remains challenging. Our base case for equities is for a cautious first half, with sentiment and market performance gradually improving towards the latter half of the year.

As we head into 2024, the global economy is expected to slow marginally with subdued growth. The deceleration in economic growth will bring uneven but continued disinflation, in particular to the U.S. and Europe. Coupled with potential earnings headwinds and a strong run in 2023, the volatility in U.S. and European equities during 1H2024 will likely be more pronounced and the risk-reward less attractive. As inflation normalizes towards 2H2024, we believe the likelihood of a Fed pivot will help ease monetary conditions and bolster the U.S. economy, thereby benefiting U.S.equities. However, investors should be wary of risks corresponding to U.S. elections towards the end 2024. Policy inactivity or missteps prior and the eventual outcome of the U.S. elections remain a significant variable and may become a drag on investor sentiment and in turn financial markets. Recessionary risks if any, remains muted as inflation is falling while employment remains strong. Over and above, we believe the relative resilience and health of the U.S. economy will likely skew investor sentiment and preference towards U.S.equities versus other regions as witnessed in 2023. The risk-reward however, is skewed towards the latter half of the year. Nevertheless, any policy missteps and failure by the other major economies in Asia and Europe to achieve a soft landing when required, may trigger a flight to quality towards U.S.equities. Overall, we are inclined towards a more tactical and defensive approach to portfolio allocation and construction in the earlier part of 2024. However, we believe turning tides in inflation, growth and monetary policy towards the middle to later part of year will lead to greater opportunities to add on meaningful risks. Specifically, falling inflation and slowing economic growth in 1H2024 may pave the way for a Fed pivot in 2H2024, easing monetary conditions to support economic growth, alongside hopes of greater fiscal support as U.S. elections get underway. Against this backdrop, a combination of defensive plays together with longer term secular growth stocks offer a more balanced risk-reward for investors. These include but are not limited to the healthcare, consumer durables and technology sectors.

The lacklustre growth in China in 2023, which has disappointed on post-COVID reopening recovery and growth expectations, is likely to spillover to 2024. Policymakers continue to grapplewith a real estate crisis, while domestic consumption continues to falter. These concerns are compounded with elevated U.S.-China tensions, diversification of supply chains away from China and geopolitical uncertainties. We believe the path to recovery will undoubtedly be bumpy but anticipate policymakers to follow through with proactive measures in their attempts to combat the crisis and stimulate growth. Growth will likely be subdued in the first half but gradually improve in the later half. Clearly, the current lack of sustainable catalysts and investor confidence remains a hurdle to more meaningful rerating in Hong Kong/China equities. Given the undemanding valuations of Hong Kong/China equities, temptations to bottom fish is relatable. Conscientious efforts to avoid pitfalls in the form of value and liquidity traps are warranted. Until such time where clear signs of sustained improvements in macroeconomic conditions, in particular, those relating to the troubled real estate sector and domestic consumption surface, we remain cautious on Hong Kong/China allocation. Meanwhile, outsized allocations are not advisable while any such allocations should be tactical in nature as any near-term rebound may turn out to be short-lived or speculative, driven by technicals rather than fundamentals. Within Hong Kong/China equities, we favour market leaders in the electric vehicle, travel, utilities and technology sectors. Until such time when clear market catalysts surface, we prefer to gain exposure via index and sector ETFs to capture market beta rather than to take individual stock risks.

Japan has outperformed in 2023 on several tailwinds that look to continue in 2024. Our base case is for the Bank of Japan to raise interest rates marginally in the first half and to refrain from material tightening due to uncertainties over the sustainability of rising inflation. Wage expectations are also changing and nominal growth could be returning after a three-decade hiatus. Together with structural upside catalysts including but not limited to 1) potential shift in yield curve control policy leading to JPY appreciation and potential further fund inflows and 2) focus and improvements in shareholder returns and ongoing corporate restructurings, relative outperformance in Japanese equities is anticipated. However, risk of rapid appreciation of JPY against the Dollar should be monitored closely as it may derail or skew the positive outlook for Japanese equities. Broadly, we believe sectors that are recovering from cyclical downturns, such as IT and communications, household electrical appliances, raw materials and chemicals are beneficiaries that will outperform.

Structured Investments

As 2023 progressed, both Hong Kong and U.S. stocks are experiencing increasing pressure on their volatility. This heightened volatility is particularly concentrated in industries such as technology, semiconductors, and electric vehicles. It is expected that this volatile trend will continue into the first half of 2024.

On a global scale, stock markets witnessed a significant rally in November, marking the largest rally since November 2020. The MSCI All Country World Index rose by 9%, while the S&P 500 index and Nasdaq Composite gained 8.9% and 10.7% respectively. This rally was fueled by the belief that the Federal Reserve and other major central banks are nearing the end of their contractionary monetary policies cycle.

Taking into account feedback from different regions, it will be natural that non-flow requests for principal protection and guaranteed coupons remain popular. Investors, in the current high-interest rate environment, are seeking higher returns than those offered by time deposits, while also prioritizing the protection of their principal. However, achieving such returns becomes more challenging when interest rates remain high and volatility levels drop.

In this context, structured products such as Fixed Coupon Notes (FCNs) with guaranteed coupons and knock-out features continue to be favored. These structures provide investors with a steady stream of guaranteed coupons while protecting against potential downside risks. Furthermore, FCNs offer investors the opportunity to acquire shares at a discounted price in the event of physical delivery, thus acquiring them at attractive valuations in anticipation of a market recovery. Considering the market rally observed in November, our desk recommends setting low auto callable levels to capitalize on the market rally and increase turnover of standard flow structured products.

Regarding non-flow products, structures with principal protection will remain in high demand for the first half of 2024. This is partly due to the fact that over 60% of traders have priced in a rate drop by the Federal Reserve during that period. In light of that, we highly recommend that investors utilize rate-linked derivatives to secure the current high-rate offerings.

Private Equity

With subdued global growth outlook and high-interest rate (relative to historical cycles) environment in 2024, we are cautiously optimistic towards private market investments. We believe 2024 is an attractive vintage year and good window to deploy for investors to look for “real return” and exposure to superior fundamental growth trend where public market cannot offer. However certain risks cannot be ignored. Here is how we do it.

What are the opportunities?

Firstly, the sectors – Fundamental matters for private equity and private market returns. We focus on long term growth sectors such as technology and healthcare. Artificial Intelligence(“AI”) and semiconductor around AI and high-performance computing are expected to have high growth and attract large growth funding. We expect most unicorns will be generated in this space in the next 2-3 years. Other sectors we like include renewable energy transition, such as EV supply chain efficiency improvement in battery, hydrogen and charging efficiency related. We will continue to keep an eye on education and healthcare, especially on those with AI-empowered business models.

Secondarily, valuation. Opportunities rise as private market valuation continued to rationalize. We see secondary valuation averages at 16% discount relative to NAV. We are open-minded with quality secondary blocks with attractive valuation and exit outlook.

Thirdly, structure. With challenging fund-raising environment globally, we see opportunities rise in deals structured as high-yield and with quality collaterals, which offers higher and quality return relative to public credit and more exit certainty than traditional private equity.

What are the risks and how to diversify and mitigate?

Geopolitical risks remain a key risk factor as it affects fundamental and exit/IPO/M&A, we believe China/Hong Kong continue to have cyclical weakness and we eye on global markets to diversify risks. Slower IPO market is the main exit risk, yet we see more active M&A and secondary private markets, where we actively seek exit opportunities for our portfolio.

Raffles Family Office Private Equity/market investment thesis of 2024, is to invest in quality companies the private market to capture the irreversible technological trend. We, however, shall be disciplined in valuation and mitigate risks in exit and illiquidity, via structuring (such as convertible credit, or high-yield private credit with warrants).

Real Estate

Macro Context – Real Estate as an Inflation Hedge and 2024 being a ‘Vintage’ year for buyers

Demand in real estate will continue to be grow as a longer-term inflationary hedge despite some initial indication that global inflation may have peaked out towards end 2023. Extended periods of high inflation thereby driving higher interest rate will linger in the mind of investors who will look to better “inflation proof” their portfolio despite potentially tapering rate. Although real estate incomes may not completely offset the speed and magnitude of recent inflation spikes, they have surpassed most other asset classes in reducing such impacts through corresponding rental increases.

Recent prolong high interest rate environment means real estate values have seen significant downward pressure. This is particularly evident in pockets of the market where there is an excessive reliance on real estate debt. This can result in forced sales due to elevated holding/ interest costs. When a substantial segment of the market is compelled to sell, real estate values may decline despite stable income, leading to higher yields and reduced transaction prices. The ongoing correction in real estate pricing, even in core Asia Pacific markets where fundamentals remain robust, presents an increasingly intriguing opportunity for buyers. This trend is particularly noteworthy for private wealth and family offices with a longer investment horizon.

Notable Demographic Trends in Asia

The positive fundamental aspects deserve further discussion. Asia’s demographic outlook is more promising compared to Europe or the U.S.U.S., with a younger population. The rapidly expanding middle-income group will lead to increase of per capita consumption. Collectively, this demographic possesses unmatched spending power globally, which will propel real estate value growth in the foreseeable future.

Demographic shifts often signal emerging themes and structural changes in the real estate sector. A notable trend is the rise of a youthful population and their preference for community living. This trend’s underlying causes are multifaceted, partly due to affordability challenges or the lack of it. Consequently, the emergence of co-living and its various offshoots will become a significant theme in the living sector. Smart money has already and will continue to gain exposure in this sector. The opportunity to scale up in providing affordable housing solution will remain a key theme, beyond 2024.

Core Asia Pacific Markets

As global complexity and volatility escalate, factors such as transparency, perceived security, and market liquidity rank high on investors’ agendas. These attributes are present in select core Asia Pacific markets. Combined with solid fundamentals and continuous growth prospects, private wealth remains predominantly oriented towards this region.

Another consideration is “home bias” – a significant portion of wealth originates from Asia. Cultural familiarity, proximity to core businesses, and even currency holdings are key factors.

The current focus continues to be on core markets within Asia Pacific, where risk-adjusted returns appear highly attractive for 2024.

Singapore, known for its perceived safety, will maintain its appeal for core investment capital. The relatively small size of its commercial investment market is likely to experience substantial valuation growth, driven by an influx of capital, once interest rates begin their downward adjustment. There will be strong buying opportunities for longer term capital as yields have shifted higher, albeit within a tight range. The buying window will likely be short as interest rate peak out in 2024.

Opportunity– Buy into freehold or long leasehold office buildings for core investors. For investor who can on asset management work, poorer performing commercial asset in core location will present strong value proposition.

Australia shares similar attributes. Its cities, Sydney and Melbourne, have long been preferred destinations for offshore capital due to their transparency and clear rule of law. There’s an increasing demand for residential units, and the potential for attractive office repositioning opportunities in CBD areas, as office workers postpone their return.

Opportunity– Buy into well located commercial assets within Sydney and Melbourne CBD with long lease for longer term dividend play.

Japan and Korea also show strong potential in their living sectors, as the younger generation continues to prefer renting over homeownership. This trend bolsters the long lease sector, rewarding the most proficient operators.

Opportunity– Buy into portfolio of multi-family living for yield play. Korea may present more value proposition given current high yield and strong fundamentals. When global interest rates come off, Korea will likely outperform as asset valuation rebound will be more notable as compared to Japan. In Japan, asset valuation has remained robust as it has kept its interest rates low.

Despite recent challenges, Hong Kong remains a crucial gateway to Asia. The larger-than-usual drop in property values is expected to unveil significant investment opportunities, particularly within the hospitality sector. As tourism pick up, there will be growing buying interest in this segment, at least in 2024.

Opportunity– Buy into distressed portfolio burdened by high interest costs. There are pockets of opportunity in offloading assets held by companies whose core business is not in real estate. Hospitality and certain office assets, especially those in core location i.e. CBD will provide strong value proposition in the years to come.

Digital Asset

Market Overview
The digital asset market is gearing up for a few significant growth events in 2024. One of the pivotal developments is the expected approval of bitcoin and ethereum spot Exchange Traded Funds (ETFs) in the U.S. This development will be a major catalyst boosting institutional investments and furthering mass adoption in the industry. Another event is bitcoin halving – the scheduled reduction of mining rewards in April 2024 from 6.25 BTC per block to 3.125 BTC.

Beyond these crypto-specific events, broader macroeconomic factors, such as geopolitical tensions, the anticipated U.S. elections, and the potential for Federal Reserve rates cuts will likely fuel increased interest in the industry.

Beside bitcoin and ethereum, we will likely see increase allocation in the broader market in altcoins and other digital assets like income yielding products. Asset allocation percentages will also likely climb from the low single digits to the high teens among progressive educated investors.

Infrastructural Innovation and Tokenisation
2024 will also see continuous engagement on two areas: infrastructural developments and real world asset (RWA) tokenisation.

There will be significant innovation and increase liquidity. The tokenisation of RAW allows traditional asset owners to bridge their understanding and experience from tangible financial assets to the virtual world of cryptocurrencies and tokens. The past decade of development will see more projects reaching their milestone deliveries in these areas.

Industry Dynamics
Further regulatory clarity will be seen in the region in cryptocurrency hubs like Hong Kong and Singapore. The coming-of-age industry is expected to get crowded with more service providers coming onboard with the bullish industry projection.

Increased international and regional collaborations will be expected among governmental bodies to further enhance regulatory enforcement in building a more robust regulatory framework for investors. 2024 will also see clearer tax legislations and incentives in the industry, which is much anticipated, as investors increase their allocation into digital assets.

Industry Trends
The price trajectories of the top 20 tokens are looking promising with price expectations exceeding their previous ATHs (all time high). The bullish outlook is expected to be held by marked increase in institutional allocation and fuelled interest from the mass market.

Beside bitcoin, the digital gold, ethereum is also set for new growth with broader industry-wide applications. With improved user experience and increased education, structure products and income yielding assets will also get more participation.

Innovative scaling and improved interoperability capabilities will also drive significant growth in areas like DeFi (decentralised finance), DePIN (decentralised physical infrastructure) and decentralised storage. This growth will bring peripheral product offerings for further diversified investment opportunities for the industry.

Strategic Direction of Revo Digital Family Office (Revo)
Revo will continue to lead the way for our clients navigating the exciting and complex digital asset landscape. We will be launching more products and services in 2024 to fulfill the varied investment objectives of our clients.

Revo will partner with esteemed licensed counterparties to deepen our offerings, particularly on External Asset Manager (EAM) services and structured products, together with our bespoke investment advisory services capitalising on best-in-class risk management tools.

As we welcome 2024, the digital asset market presents a dynamic and potentially high returns investment segment relative to its corresponding risks.

Revo remains bullish in the long-term growth of the industry. With a relatively higher Sharpe ratio compared to traditional asset classes and low returns correlation, Revo believes that allocation to digital asset is critical and integral to a balanced and prudent diversified portfolio.

This document contains material based on publicly-available information. Although reasonable care has been taken to ensure the accuracy and objectivity of the information contained in this document, Raffles Family Office Pte. Ltd. (“RFOPL”) and Raffles Assets Management (HK) Co. Limited (“RAM”) make no representation or warranty as to, neither has it independently verified, the accuracy or completeness of such information (including any valuations mentioned).  RFOPL and RAM do not represent nor warrant that this document is sufficient, complete or appropriate for any particular purpose. Any opinions or predictions reflect the writer’s views as at the date of this document and may be subject to change without notice.
The information contained in this document, including any data, projections and underlying assumptions, are based on certain assumptions, management forecasts and analysis of known information and reflects prevailing conditions as of the date of publication, all of which are subject to change at any time without notice. Past performance figures are not indicative of future results.
Not an investment recommendation, offer or solicitation to any particular person
This document should not be regarded as an investment recommendation, offer or solicitation to any particular person to transact in any product mentioned. Before deciding to invest in any product, you should seek advice from your financial, legal, tax or other professional advisers on the suitability of the product for you, taking into account your specific investment objectives, financial situation or particular needs (to which this document has no regard). If you do not wish to seek such advice at your own decision, you should consider and assess carefully whether any product mentioned is suitable for you after having received and read in detail the specific product information and relevant risk disclosure statements.
An investment in any product mentioned in this document may carry different risks of varying degrees, including credit, market, liquidity, legal, cross-jurisdictional, foreign exchange and other risks (including the risks of electronic trading and trading in leveraged products). Investments involve risks. The prices of investment products may fluctuate and sometimes dramatically. The price of an investment product may move up or down, and may become valueless. It is as likely that losses will be incurred rather than profit made as a result of buying and selling investment products. Nothing in this publication constitutes personalized accounting, legal, regulatory, tax, financial or other advice that regards the personal circumstances of a particular recipient. You should seek your financial, legal, tax or other professional adviser to understand the risks involved and whether it is appropriate for you to assume such risks before investing in any product.
Any description of investment products is qualified in its entirety by the terms and conditions of the investment product and if applicable, the prospectus or constituting document of the investment product.
Product valuations in this document are only indicative and do not represent the terms on which new products may be entered into, or existing products may be liquidated or unwound, which could be less favourable than the valuations indicated herein. These valuations may vary significantly from those available from other sources as different parties may use different assumptions, risks and methods.
No liability
To the fullest extent permitted under applicable laws and regulations, RFOPL, RAM and its affiliates shall not be liable for any loss or damage howsoever arising as a result of any person acting or refraining from acting in reliance on any information, opinion, prediction or valuation contained herein.
RFOPL, RAM and its affiliates involved in the issuance of this document may have an interest in the products mentioned in this document including but not limited to, marketing, dealing, holding, performing financial or advisory services, or acting as a manager of persons mentioned in this document. RFOPL, RAM and its affiliates may have issued other reports, publications or documents expressing views which are different from those stated in this document and all views expressed in all reports, publications and documents are subject to change without notice.
Singapore & Hong Kong
This document and its contents are only intended for Accredited Investors (as defined in Section 4A of the Singapore Securities and Futures Act (Chapter 289)) in Singapore and Professional Investors (as defined in the Hong Kong Securities and Futures (Professional Investor) Rules (Cap. 571D)) in Hong Kong. This document and its contents have not been reviewed by the Monetary Authority of Singapore or the Securities and Futures Commission of Hong Kong.

William Chow – Deputy Group CEO

William Chow – Deputy Group CEO

Mr. William Chow brings over two decades of asset management experience and currently oversees Raffles Family Office’s (RFO’s) Advanced Wealth Solutions division while also serving on its Board of Management and Investment Committee.

He joined RFO from China Life Franklin Asset Management (CLFAM), where as Deputy CEO from 2018 to 2021 he oversaw $35 billion in client investments. William also chaired the firm’s Risk Management Committee and was a key member of its Board of Management, Investment Committee and Alternative Investment Committee. Prior to CLFAM, he spent 7 years at Value Partners Group, the first hedge fund to be listed on the Hong Kong Stock Exchange, where he was a Group Managing Director. He started his career at UBS as an equities trader and went on to take up portfolio management roles at BlackRock and State Street Global Advisors from 2000 to 2010.

William holds a Master’s degree in Science in Operational Research from the London School of Economics and Political Science, and a Bachelor’s degree in Engineering (Hons) in Civil Engineering from University College London in the UK.

Derek Loh, Head of Equities

Derek Loh – Head of Equities

Mr. Derek Loh is the Head of Equities at Raffles Family Office. Derek has numerous years of work experience from top asset management firms and Banks – 16 Years on the Buy-side across 3 Major Cities in Hong Kong, Singapore and Tokyo. Derek demonstrates in-depth industrial knowledge and analysis, covering mostly listed equities.

As an Ex-Portfolio Manager for ACA Capital Group, Derek managed a multi-billion-dollar global fund for a world-renowned sovereign wealth fund and reputable institutional investors. Previous notable investors serviced include Norges Bank (Norwegian Central Bank), Bill & Melinda Gates Foundation and Mubadala. Derek holds an Executive MBA from Kellogg School of Management and HKUST. He is also a CPA.

Ek Pon Tay – Head of Fixed Income

Ek Pon Tay – Head of Fixed Income

Mr. Tay Ek Pon is responsible for fixed income investment management at Raffles Family Office. He has over 20 years of fixed income experience across Singapore and Japan.

Prior to joining Raffles Family Office, Ek Pon was a portfolio manager at BNP Paribas Asset Management since 2018, responsible for Asia fixed income mandates. From 2016 to 2018, Ek Pon led the team investing in Asian credit at Income Insurance. From 2011 to 2016, he worked at BlackRock, managing benchmarked and absolute return fixed income funds. Earlier in his career, he held several positions as a credit trader in banks for 9 years.

Ek Pon graduated from the University of Melbourne with a Bachelor of Commerce and Bachelor of Arts.

Sky Kwah – Director, Investment Advisory

Sky Kwah – Director, Investment Advisory

Mr. Sky Kwah has over a decade of work experience in the investment industry with his last stint at DBS Private Bank. He has achieved and receive multiple awards over the years being among the top investment advisors within the bank. He often deploys a top-down investment approach, well versed in multiple markets and offering bespoke advice in multiple assets and derivatives.

Prior to his role at Raffles Family Office, Sky worked at Phillip Capital as an Equities Team leader handling two teams offering advisory, spearheading portfolio reviews and developing trading/investment ideas.

He has been interviewed on Channel News Asia, 938Live radio, The Straits Times and LianheZaobao as a market commentator and was a regular speaker at investment forums and tertiary institutions.

Dr Joe Kwan – Managing Partner, Real Estate

Dr Joe Kwan – Managing Partner, Real Estate

Dr Joe Kwan is a Managing Partner at Raffles Family Office (RFO), a pan-Asian financial advisory firm that caters to the wealth growth and preservation needs of ultra-high net worth families. His role centres on overseeing Raffles Real Estate, a property solutions team that helps clients optimise their real estate portfolios and acquisitions, and that is part of RFO’s Advanced Wealth Solutions division.

Prior to joining RFO, Dr Kwan led real estate investment advisory firm Sakal Real Estate Partners (SRE), which in the four years since he co-founded the business originated and advised on institutional real estate transactions totalling more than S$1 billion.

Dr Kwan’s 18-plus years of institutional buy-side real estate investment experience includes the Head of Singapore role for global private equity real estate firm Chelsfield Asia. This followed his more than four years with UBS Global Asset Management (GAM), where he managed a multi-billion US dollar core real estate fund focused on direct investments across Europe and Asia-Pacific; served as a member of the UBS China Investment Committee; and was UBS GAM’s head of Research and Strategy for Asia Pacific real estate.

Dr Kwan’s career has also seen him lead Asia-Pacific strategy and portfolio allocation for Aviva Investors, where he helped guide direct and indirect real estate fund investments across the region. He additionally spent his part of his career working for Singapore’s Urban Redevelopment Authority, where he worked on devising land policies.

Dr Kwan holds a doctorate in philosophy and a 1st class honours bachelor’s in Civil Engineering from the University of Nottingham in the UK.

Zann Kwan – Managing Partner, Chief Investment Officer, Revo Digital Family Office

Zann Kwan – Managing Partner, Chief Investment Officer, Revo Digital Family Office

Ms. Zann Kwan is Managing Partner, Chief Investment Officer of Revo Digital Family Office, the first-of-its-kind platform in Asia that enables ultra-high net worth families to access and invest in digital assets via a centralized wealth management platform.

Ms. Kwan’s role demonstrates the firm’s continued commitment to serving the needs of both traditional and digital asset wealth holders through a unified ecosystem with access to the digital assets industry, a sector that has a growing interest from UHNW investors in Asia.

Ms. Kwan brings close to twenty-five years of professional and financial services experience, in which nine of those have been dedicated to the digital assets space. Kwan, who was most recently a member of Raffles Family Office’s Independent Advisory Board, co-founded Bitcoin Exchange Pte Ltd, the company behind the first public bitcoin machine in Asia, as well as virtual asset service provider Deodi Pte Ltd. Kwan, will work closely with Revo’s Chief Executive Officer (CEO), Ray Tam, and will be based in Singapore.

Ms. Kwan spent the last nine years in cryptocurrency and digital assets in her twenty-five years of professional experience in finance and investments. Kwan is the co-founder of Bitcoin Exchange Pte Ltd, a cryptocurrency pioneer that launched the first public bitcoin machine in Asia in early 2014. She also founded Deodi, a virtual asset service provider, to improve the accessibility of cryptocurrencies for retail and institutional participants.

Ms. Kwan has been on the board of ACCESS, the leading blockchain and cryptocurrency industry association in Asia. She also is an ex-member of Raffles Family Office’s IAB and a board member of CFA Society of Singapore. Being one of the first accounting-trained entrepreneurs in the cryptocurrency space, she has played an instrumental role in the development of tax regulations on digital tokens in Singapore, advising IRAS in the nascent years. She is also part of the ACCESS consultation group to formulate the code of practice for the cryptocurrency industry in Singapore. She has been called the “Crypto Queen” by the Accounting and Business Magazine by ACCA in 2019 for her contribution in the space.

Jo Huang, CFA – Head of Private Equity

Jo Huang, CFA – Head of Private Equity

Ms. Huang brings in 20 years of experience in the financial industry, encompassing a solid 16 years of experience in private equity across multiple markets.

Ms. Huang led the private market investment department of PICC Asset management Hong Kong and was one of the company’s investment committee team members for 4 years. Prior to that, she served as Investment Director at GF Investments Hong Kong for 3 years. Prior to GF, she was a Principal at Excelsior Capital Asia for 7 years, a leading international growth capital private equity firm with reputable institutional LPs including US and European pension funds, university funds and insurance companies.

Prior to her private equity career, she has worked in Credit Suisse Hong Kong Equi􀆟es Research and Fixed Income Research with Commonwealth Bank Australia in Sydney.

Ms. Huang is a CFA charter-holder. She holds a Master of Management in Finance from Macquarie Graduate School of Management and a Master of Informa􀆟on Technology from University of Sydney.

Julien Grunebaum - Head of Structured Investments

Julien GrunebaumHead of Structured Investments

Julien oversees and drives internal distribution and strengthens the group’s investment capabilities in bespoke cross-asset investment solutions, spanning both discretionary and advisory strategies.

Pivotal in the department’s inception, it has secured direct access to over 18 investment banks, leveraged by a state-of-the-art platform for lightning-speed pricing. Consequently, there’s been an impressive 23-fold surge in turnover, marking a significant uptick in Return on Assets.

Prior to Raffles, Julien accrued a decade of expertise and held leadership roles in structured products at renowned investment banks.

Like this article?