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Thu, February 3, 2022 | 01:06
Companies
Citibank's diversification strategy shines amid downturn
Posted : 2019-09-25 17:30
Updated : 2019-09-25 18:26
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A Citibank Korea employee discusses wealth management with a customer in this file photo. / Courtesy of Citibank
A Citibank Korea employee discusses wealth management with a customer in this file photo. / Courtesy of Citibank

Citibank Korea's wealth management strategy, which centers on diversifying investments, has gained attention as it has generated stable returns for investors despite lingering uncertainties caused by the U.S.-China trade war and Korea's trade feud with Japan.

Since 2015, the bank has stressed the importance of asset allocation and currency diversification based on a Citi Model Portfolio built for each customer's risk profile, offered by the Global Investment Committee. This strategy has resulted in remarkable performance since the latter half of 2018, when the stock market began to slow with market uncertainty increasing.

The bank's moderate-type Citi Model Portfolio and aggressive-type Citi Model Portfolio recorded 7.0 percent and 8.1 percent rates of return respectively for the year.

The two portfolios have performed relatively well while most stock markets have posted a significant level of negative returns over the past year.

"Citi's Model Portfolio's return on revenue (ROR) is not highly volatile during investment periods. Instead of a high ROR, it provides steady and stable profits," said Ji-Kang Kim, head of retail banking.

The bank selects funds to comprise the assets in the Model Portfolio based on market outlook reports and investment themes, offered every quarter by the Global Investment Committee, helping investors create their own portfolio.

Meanwhile, the proportion of the bank's foreign-currency assets under management increased from 17 percent in early 2018 to 34 percent at the end of August 2019. In particular, investment in overseas bonds has more than doubled over the past 12 months.

A steady increase in foreign-currency investment has a positive impact on a customer's overall portfolio. This has led to increased customer satisfaction and, consequently, a 27.4 percent increase in the bank's foreign-currency assets under management from January to August 2019.

Citibank Korea is using advanced consultation tools to manage each customer's financial goals and portfolios based on the Citi Model Portfolio, offered by Citi Global Investment Committee, with a focus not on sales of individual products but on portfolio and asset allocation.

Citibank also provides a portfolio review service on a regular basis, with portfolio counsellors.

The bank recommends a variety of product line-ups using Citi's global network, ranging from mutual funds and structured products to overseas bonds, insurance and foreign exchange.





 
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