As investing becomes increasingly commoditised through low-cost ETFs and digital platforms, wealth managers must differentiate themselves not by providing access to markets but by constructing portfolios capable of navigating changing market regimes and investor behaviour.
For Ricardo Castillo, CIO at Mirabaud Wealth Management, that requires bringing the discipline of institutional portfolio management to private wealth, combining passive investing, selective active management and alternative assets within a framework designed to preserve capital across generations. He stressed that “the investment policy is defined at the group level, while its implementation is adapted to local norms and regulatory standards, including Luxembourg.”
Strategic allocation: passive vs. active management
Mirabaud’s implementation strategy is essentially binary: they default to passive management for efficient, broad-market indices unless they identify significant alpha potential. For instance, core holdings such as the US market or general MSCI World exposure are typically handled through passive vehicles.
Conversely, in markets where inefficiencies exist, the firm shifts to active management. This is evident in their allocation to high tracking-error active strategies in emerging markets and their use of full active management for European small and mid-caps.
Castillo noted that while active management is under pressure globally, specific niches—such as emerging markets and small-cap stocks—still offer opportunities for managers to add value. The firm operates an open-architecture model, selecting passive or active vehicles according to market efficiency, expected alpha and cost.
Mirabaud builds performance track record
As active managers continue to face scrutiny over their ability to outperform passive benchmarks after fees, Castillo was asked to provide Mirabaud's long-term performance record.
He said the firm has not historically published an aggregated 10-year track record because it did not follow Global Investment Performance Standards (GIPS) and portfolio management was not fully unified. The bank is now building GIPS-compliant composites to establish an official, publicly shareable track record.
Momentum drives Mirabaud’s investment strategy
Castillo describes the approach as a traditional momentum style, favouring assets with improving earnings expectations and persistent price trends. Rather than attempting to predict the economy, Mirabaud listens to the market to identify the prevailing market regime, whether characterised by reflation, disinflation or defensive positioning, with assets such as gold benefiting under certain conditions. “We want to be sensitive to what the market tells us,’ Castillo said.
Risk management begins with the client's risk profile, which determines the benchmark. The Investment Committee then makes tactical adjustments within each mandate, from the most conservative to the most aggressive. Mirabaud's core private banking clients typically hold between €3 million and €30 million in liquid assets.
Alternatives and the search for asymmetry
This top-down allocation framework also shapes the firm's approach to alternative investments. In the current environment, Mirabaud is “structurally underweight” on debt and duration due to concerns regarding inflation and deficits. “We will not have 30% in cash in a portfolio,” said Castillo. To compensate, they have integrated a 10% to 20% allocation to alternatives (hedge funds, commodities), categorised into three complementary pillars designed to enhance portfolio resilience.
The first is fiat currency debasement protection, primarily through an allocation to gold as a credible alternative to traditional cash holdings, “a bit like central banks.” The second is asymmetric equity beta, which employs long-short equity strategies to capture market upside while limiting downside risk.
The third pillar seeks uncorrelated convexity through semi-liquid hedge funds targeting returns of approximately cash +2–3% while maintaining low correlation with traditional equity and fixed-income markets. These strategies are designed to provide insurance premiums through the sale of options, allowing clients to stay in the market during strong trends without being wiped out by sudden reversals.
Private assets shape multi-generational wealth
Mirabaud views private assets as essential components of a multi-generational wealth strategy. Its approach emphasizes private markets as a source of long-term returns and diversification.
In private equity, Castillo stressed that they focus on funds investing in late-stage growth companies with established revenue streams while also providing qualified investors with access to select high-profile direct pre-IPO investment opportunities, such as SpaceX.
I do not think evergreen funds should be blacklisted. Many were simply mis-sold
In private credit, the wealth manager avoids crowded mega-deals dominated by software companies, instead targeting mid-sized corporate lending and commercial real estate bridge loans, which are valued for their limited correlation with liquid markets.
Finally, in infrastructure, Mirabaud differentiates between listed infrastructure companies such as Eiffage and Vinci and direct investments in physical assets. Castillo argued that the latter offer more meaningful diversification and lower correlation with traditional financial markets.
While they primarily use closed-end funds for these assets, they also oversee a dedicated “Evergreen” fund structure exclusively for Mirabaud clients, which provides exposure to various underlying closed-end vehicles. “I do not think evergreen funds should be blacklisted. Many were simply mis-sold,” stated Castillo.
The human element and behavioural biases
A core tenet of Castillo’s message is that wealth management is as much about managing human emotions as it is about asset allocation. He identified three major challenges: the “conservative bias” whereby clients hold excessive cash and bonds and lose real value over decades; “regional bias” where investors over-allocate to familiar domestic stocks; and the “fear and greed” cycle.
Castillo noted that internal statistics, performed at his previous employer, show that “boring discretionary” management consistently outperforms “advisory” accounts where clients act on impulse, buying late in a rally or selling in a panic.
Beyond the robo-advisor
Finally, to attract “Gen Z” and the “Next Gen” of investors, Mirabaud focuses on education through its Academy. Castillo argued that anyone can buy an ETF online. Constructing and managing a resilient multi-asset portfolio still requires professional expertise and a trusted human relationship that goes beyond what a “robo-advisor” can provide. The goal is to ensure that even if a client is 70 years old, their portfolio is managed with the multi-generational time horizon of their heirs in mind.
