Yun cited global market volatility during September and October, particularly in the US market, which underwent an 8% correction.
The MSCI World Minimum Volatility Index sat at -3.58% in February this year and shot up to 13.9% in September, according to FE data.
"Due to volatility, we've seen this slight change in client appetite," Yun said. "We are trying to identify long short equity funds with exposure either in Europe or on a global basis. But we are looking for funds with transparency and liquidity."
Most clients still want income funds, due to the chronic low interest rate environment, he added. US treasury yields have been at 2.36% the past two months and ten-year treasury yields are not beyond 2.5%.
Global high yield is still strongly in demand and Yun believes exposure to emerging markets is attractive due to fair valuations. His team is looking at the AB Global High Yield Fund.
Some clients have shown interest in very high yielding contingent convertible bonds (CoCos). But Yun said ratings agencies such as S&P and Moody's have downgraded many CoCos compared to a few years ago.
"We cannot recommend most CoCo bonds because the majority are not invest grade.
"Clients may be happy to invest in CoCo bonds for the yield, but they need to thoroughly read the prospectus to understand the downside. If Tier 1 capital drops below a threshold, the investor might get the principal converted to underlying shares in the bank."
He was negative on Europe, which has too many uncertainties. "There's a high debt level in Europe, not to mention the [impact of] an escalation of conflict between Russia and Ukraine.
"At the end of the day investors will look at how the European Central Bank will proceed. Will they start buying securities, for example, and not just talk about it? Investors also see economic data indicating deflation and are afraid of this."
On a diversified basis, as a short-term technical play, his team is recommending mainland China funds. The bank is currently evaluating the JP Morgan A Shares Fund.
China's shift from an export-led economy to one based on domestic consumption has focused attention on consumption-related sectors. Travel-related companies fall into this category, particularly since the average wage in China has increased 10% annually for the past decade, and Chinese tend to spend their earnings on travel, he said.
"There are a lot of untapped opportunities in A-shares. Access has been limited to the QFII and RQFII programmes, but that will change with the stock connect [which launches November 17]."
