With the goal of going beyond typical Latin American private banking strategies designed for the short and medium term, Peruvian financial boutique Diagonal Investments is betting on financial advisory for high-net-worth families in the region. Thus, the firm acts as an arm of U.S.-based Sanctuary Wealth in Latin America, serving clients from a variety of countries—predominantly Peruvian investors—with ambitions for continued growth.
This is what Santiago Rey, partner and co-founder of Diagonal says in a interview with Funds Society : “Our main focus is investment advisory, and we firmly believe we are the best at it,”. While they do not have internal capabilities for corporate, tax, or wealth structuring matters, the firm guides investors by connecting them with those services. “We have experience seeing how different solutions perform from an investment perspective—something that tax advisors or lawyers do not necessarily handle,” he notes.
Currently, the boutique is placing emphasis on strengthening its team, which Rey describes as top-tier. Between their investment professionals and client service personnel, he explains, they are prioritizing internal training, synergy among team members, and recruiting more talent.
“We remain very selective when adding new investment advisors. Beyond technical knowledge of markets and products, our priority is ethical and moral alignment,” the co-founder emphasizes.
Four Years and Counting
Diagonal Investments launched in December 2022, leveraging the extensive experience of its two founders, Santiago Rey and Rodolfo “Rudy” Rake, in serving high-net-worth clients in the region. The turning point, according to Rey, was the pandemic. Following an extensive local career—where he worked for years as head of wealth management for BCP’s institutional clients—and on Wall Street—leading JPMorgan’s global investment desk for Mexican clients—Rey pivoted during the COVID era toward advising high-net-worth Peruvian families.
“Taking advantage of a period of significant market turbulence, where people were worried and unsettled by volatility,” he explains, Rey achieved good results with his portfolios, rotating them beyond the traditional concentration in Latin American bonds. During that time, the co-founder reconnected with Rake, who was working at Morgan Stanley at the time as Managing Director. Rake boasts a 16-year track record between New York and Miami—having also worked at Citigroup Smith Barney in addition to the investment bank—acting as a counterparty for major Latin American institutions.
Rake was subsequently recruited by Sanctuary Wealth, a U.S. platform for investment advisors, to expand middle-market business in the region. There, Rey began collaborating with him on certain client accounts, which inspired both professionals to launch a new firm: Diagonal Investments. The firm was also established as a strategic alliance with Sanctuary, which provides international muscle.
In Rey’s words, creating this financial boutique operating on a fee-on-AUM (assets under management) model responded to a “major opportunity to offer an independent advisory service, featuring portfolios more closely aligned with clients’ actual needs and long-term investment opportunities.”
Peru and the Rest of the Neighborhood
Given both founders’ ties to Peru—their country of origin—Lima has become the epicenter of Diagonal Investments, serving as the hub from which they have built the business. “Today it is our most important market, both in terms of client numbers and assets under advisory,” Rey explains, describing it as “a very interesting market” due to the opportunities it offers.
Although the country boasts abundant wealth and opportunities for growth and investment, political turbulence over the past decade has created some hesitation among local and foreign investors.
“This has translated into a two-way dynamic: on one hand, many high-net-worth families have moved money out of the country via dividend distributions instead of reinvesting in their companies; on the other, little foreign capital has entered due to a lack of visibility into long-term policies,” he notes. Looking ahead, Rey sees potential tailwinds if a climate of greater stability and growth consolidates under the presidency of Keiko Fujimori.
“If that confidence is restored, business owners may stop withdrawing dividends and start reinvesting locally, which would somewhat reduce the outflow toward offshore wealth management,” he indicates.
In addition to Peru, Diagonal has a client base in Miami—where they also maintain an office—Ecuador, and Mexico. These markets, the co-founding partner details, are where they see the greatest potential for regional growth, making them key targets for deepening their presence. However, the executive emphasizes that any expansion plans in these markets depend on finding the right people.
“We are always open to meeting expert professionals with a local presence in each of the region’s countries, as that represents a real growth opportunity for us,” Rey says.
Backed by Sanctuary
Considering Diagonal’s strong offshore capabilities, it is no surprise that its relationship with Sanctuary Wealth plays a central role for the Peruvian boutique.
“We maintain a very close relationship, focused on ensuring client service is top-notch and operates as smoothly as possible,” the co-founder highlights, noting the scale of the U.S. firm, which oversees more than $60 billion in assets. “That proximity has allowed us to jointly develop tools that give us significant differentiation compared to regional competitors today,” he adds.
Beyond leveraging Sanctuary Wealth’s network of custodian banks and infrastructure in the United States—including its broker-dealer and compliance teams—all advisory contracts are signed in the U.S. with the company under American regulation. The U.S. firm also contributes its dedicated investment strategy team, led from New York by Mary Ann Bartels, an experienced Wall Street strategist. The research and analysis they produce serve as input for Diagonal, where advisors manage client portfolios.
These portfolios are constructed based on model portfolios, which are subsequently customized to meet the specific needs of each family’s wealth. To achieve this, advisors blend the strategy from Bartels’ team with insights from the Peruvian firm’s investment committee, which meets monthly to adapt strategy recommendations coming from the U.S. “Our clients’ portfolios end up looking quite similar to one another, even if each has unique details. The recommendation for all our clients comes from that same process, because we want the experience to be consistent for everyone,” Rey concludes, clarifying that they do not perform discretionary portfolio management.
