Can Deutsche Bank Private Bank scale discretionary wealth management in emerging markets?

For international private banks in emerging markets, the transition from transactional fees to discretionary portfolio management (DPM) has long been a goal, but few have reached it. Discretionary mandates deliver sticky, recurring fee revenues and insulate banks from the cycles typical of regional wealth centres. However, private wealth clients in emerging markets have historically resisted delegating investment authority, preferring self-directed execution, high-conviction real estate investments, and tactical home-market trading. This resistance leaves banks with a difficult trade-off: offer fully customised portfolios that raise administrative costs, or offer rigid templates that clients often reject as misaligned with their financial realities.

Navigating this trade-off requires treating DPM not merely as a tool for generating excess return, but as a mechanism designed to insulate clients from behavioural impulses, according to Jacky Tang, Head of Discretionary Portfolio Management and Chief Investment Officer for Emerging Markets at Deutsche Bank Private Bank. Tang explained the bank’s DPM expansion plans through an operating model designed to grow the business without a matching rise in overhead costs. The model is built on unified research and execution desks, a split of roughly 80% standardised multi-profile portfolios and 20% tailored mandates and shared use of institutional platforms.

Discretionary mandates as  a tool beyond generating alpha

While private banks routinely market discretionary services on the promise of investment alpha, active outperformance alone is insufficient to win and retain private client DPM relationships in emerging markets. Tang shared that Deutsche Bank's flagship strategies have demonstrated consistent outperformance, net of fees, over the last couple of years. They  delivered 3% to 4% in pure equity mandates, 1% to 2% in fixed income, and approximately 3% in multi-asset portfolios. Yet Tang contends that client adoption falters whenever the DPM conversation focuses strictly on beating market benchmarks.

The value of DPM needs to be seen beyond the generation of alpha and as a tool to achieve true diversification and risk management, by basing investment decisions beyond clients’ own biases. 

Tang highlighted that clients often get trapped by their behavioural biases and emotions, which may not be the best result from a portfolio performance standpoint. He sees DPM not just as outsourcing the portfolio management capability but as “outsourcing the emotion”. Asian wealth owners, whether navigating generational succession or managing liquidity post-monetisation, frequently fall victim to emotional traps during market cycles. Real estate magnates often default to the belief that domestic property is the only reliable store of value, while geopolitical shocks regularly trigger hasty portfolio liquidations. DPM offers the benefit of not basing investments on emotions and allows for a more objective long-term investment process based on professional expertise.

A core-and-satellite framework separates long-term and tactical capital

The most challenging friction point remains initiating the DPM relationship, as moving a client from transactional trade conversations to long-term diversification requires significant educational effort. Tang’s team actively educates Asian clients who may only understand local assets or US Treasuries on non-domestic global assets such as German Bunds and instruments from niche European and other global markets to facilitate a move beyond home bias. Mandate adoption is not dictated by whether a client is first generation, next-generation, or an entrepreneur, but by investor mentality. Private Bank clients constitute the core target, but Tang’s DPM unit also manages small institutions, such as family endowments, charities, and foundations connected to private clients, that do not meet institutional sizing thresholds.

Deutsche Bank’s DPM solution works around a core-and-satellite framework. Clients anchor their base wealth in a long-term, globally diversified DPM mandate, while simultaneously overlaying structured products or capital markets solutions. The discretionary portfolio serves as the disciplined core designed to withstand economic and market cycles, while tactical satellite solutions accommodate the client’s appetite for active trading. By ring-fencing the core portfolio under professional discretion, the bank aims to eliminate reactive client decision-making during downturns, while providing clients with the opportunity to benefit from short-term opportunities.

Building scale in emerging markets

The core operational hurdle to expanding discretionary mandates is the cost of bespoke customisation, as tailored mandates across hundreds of private wealth accounts add to mid-office workload, eroding margins. To stay efficient, Deutsche Bank Private Bank keeps customisation within its emerging markets discretionary book within set limits.

Tang explained, "If you want to scale the business, you cannot offer complete customisation. It may be 20% and the remaining 80% is anchored in standardised portfolios.” To ensure these non-customised solutions remain attractive to sophisticated wealth owners, the bank has expanded its product suite to offer a spectrum of risk profile configurations rather than generic off-the-shelf buckets. Bespoke structuring is reserved exclusively for accounts that meet rigorous asset-size thresholds, where complexity justifies the additional operational commitment.

To scale this model without multiplying headcount, the Private Bank is leveraging an institutional delivery model and is expanding its strategic collaboration with DWS, the asset management arm majority-owned by Deutsche Bank. Under this model, it’s envisaged that Deutsche Bank’s portfolio implementation will be supported by DWS’ institutional investment and execution platform. This arrangement will provide the technological capability to administer institutional calibre portfolios for private clients while containing fixed operational expenditure.  

Balancing geographical allocation and benefits of a unified desk

Asian wealth owners often find that global portfolios are concentrated in one region. Tang observed that many institutions offer global mandates that allocate more than 50% to US dollar assets while leaving Asia with a marginal allocation. He explained, "We actually have much more substantial sizing in Asia and try to ensure that the portfolio is not overly skewed towards one country or continent.” Establishing credibility through balanced portfolio construction also enables wealth managers to engage emerging market clients constructively on reducing domestic home bias and diversifying their portfolios. When client sentiment demands geographical adjustments, the bank's quantitative managers calculate the necessary rebalancing to accommodate their preference without sacrificing the overall risk-return profile.

The structural unification of Deutsche Bank Private Bank’s Chief Investment Office (CIO) with DPM facilitates global consistency in performance and client experience, reducing regional or product-driven disconnects. Tang oversees both research and discretionary execution, ensuring that strategic asset allocations and tactical recommendations are reflected systematically across portfolios worldwide.

Investment committee decisions to overweight an asset class are applied consistently across portfolios. Client feedback informs research agendas without compromising independent macro analysis. A specialised risk-return engineering group within the CIO develops systematic hedging strategies using derivatives to improve expected returns while maintaining similar portfolio volatility.

Asset acceleration and institutional integration set up the next test for DPM

The commercial impact of Deutsche Bank’s emerging markets DPM operating framework is reflected in the bank's asset trajectory. Discretionary portfolio assets reached $6.8 billion in 2025, up by approximately 40% on the previous year, and the expansion rate has been carried into 2026. Mandate growth has come from a dual track: educating existing transactional and advisory private banking clients to allocate core funds into DPM, and onboarding new clients directly into holistic discretionary packages.

Geographically, the origin of client wealth of the DPM Emerging Markets portfolio remains heavily weighted towards North Asia, followed by Southeast Asia, with emerging contributions from Latin America and the Middle East. However, booking patterns diverge sharply from client origins. Despite North Asian clients accounting for the bulk of the book, more than 80% of discretionary assets are booked out of Singapore, highlighting that the operational core of the DPM platform is tied to Singapore's booking infrastructure. The bank also maintains booking centres in Hong Kong and Switzerland, providing clients with a choice, an important factor given the current trend in private wealth for optionality to build resilience.

As Deutsche Bank moves to expand the collaboration between its Private Bank’s discretionary desk and DWS, its expansion strategy will test whether an integrated, quantitative investment approach can fundamentally change the historical inclination of emerging market wealth clients towards transactional trades. A lot will depend on executing the announced DWS collaboration without client friction, maintaining portfolio discipline within the current standardisation ratio, and proving that an institutionalised investment process can manage client emotion through shifting geopolitical cycles.