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Multi-asset investing in an uncertain world 12 January 2012 David Buckle FOR PROFESSIONAL CLIENTS ONLY Multi-asset solutions
SECTION 1 The case for multi-asset investing
The challenges of an uncertain world <ul><li>Global macro concerns </li></ul><ul><ul><li>Will the Euro survive? </li></ul>...
Using a multi-asset approach to navigate volatile markets  <ul><li>Allocate assets across a global opportunity set </li></...
Europe: Time to decide to break up or not break up? <ul><li>Either the current structure will have to change, or the curre...
Asia: Can China avoid a hard landing? Japanese growth extrapolation proved too optimistic Source: Datastream, UBS Global A...
US: Starting the slowing cycle from a weak position ……  and a bigger negative output gap Source: UBS Global Asset Manageme...
We are not currently positive on equities Source:  UBS Global Asset Management 1 Applicable to global equity only 30 Novem...
Credit remains attractive Source: Datastream, Moody’s, UBS Global Asset Management As of 31 October 2011 US High Yield  US-I
Index-linked gilts look attractive relative to nominal bonds Source: Datastream, UBS Global Asset Management. Note: Data t...
Asset allocation is primary determinant of returns <ul><li>Asset mix decision: </li></ul><ul><ul><li>primary determinant o...
Tactical decisions can enhance returns Source: Gilts: FT Over 15 year Gilt Index sourced from Mellon. US Equities: S&P 500...
Cost is another significant determinant of investor returns Source: UBS Global Asset Management, Datastream Note: As at 30...
The importance of multi-asset investing  <ul><li>The world is uncertain </li></ul><ul><li>Take a diversified, multi-asset ...
SECTION 2 UBS – multi-asset specialists
A ‘lost’ period for equities but… … not for UBS multi-asset strategies Long-term performance vs. equity indices, 2000 – 20...
Building a diversified portfolio <ul><li>112 employees across the world; multi-asset portfolio managers on 3 continents </...
SECTION 3 Introducing the UBS Global Diversified Fund
What is the UBS Global Diversified Fund? <ul><li>The UBS Global Diversified Fund offers lower cost access to long-term cap...
A diversified offering and approach to managing portfolios Emerging market debt Emerging market equities Developed equitie...
UBS Global Diversified Fund Cash² Equities Up to 60% Bonds Up to 100% Alternatives¹ Up to 40% Source: UBS Global Asset Man...
UBS Global Diversified Fund Source: UBS Global Asset Management. 1 Based on key decision makers within the Asset Allocatio...
SECTION 4 Introducing the UBS Multi-Asset Income Fund
Traditional sources of income remain under pressure <ul><li>Inflation above Bank  of England target </li></ul><ul><li>Bank...
UBS Multi-Asset Income Fund <ul><li>Diversification across asset classes </li></ul><ul><li>Combining different sources of ...
Current investment strategy Source: UBS Global Asset Management Note: Data as at 31 December 2011  UBS Multi-Asset Income ...
UBS Multi-Asset Income Fund: summary Current yield of 4.8% p.a. 1 Source: UBS Global Asset Management. 1  Distribution yie...
SECTION 5 Appendix
UBS Global Diversified Fund 1  Swing pricing applies (see prospectus for details) . 2  A Shares accumulation (net) 3  K Sh...
UBS Multi-Asset Income Fund 1  The investment manager’s target income is one month sterling LIBOR plus 3% net of fees. Thi...
Asset allocation changes in the Multi-Asset Income Fund Monthly strategy asset class weights of Multi-Asset Income Fund (U...
Current yield 4.8% p.a. 1 Source: UBS Global Asset Management. Note 1 Distribution yield 4.8% p.a. as at 31 December 2011....
Important information <ul><li>This document is for Professional Clients only. It is not to be distributed to or relied upo...
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Nma presentation final

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Nma presentation final

  1. 1. Multi-asset investing in an uncertain world 12 January 2012 David Buckle FOR PROFESSIONAL CLIENTS ONLY Multi-asset solutions
  2. 2. SECTION 1 The case for multi-asset investing
  3. 3. The challenges of an uncertain world <ul><li>Global macro concerns </li></ul><ul><ul><li>Will the Euro survive? </li></ul></ul><ul><ul><li>Is the Chinese growth story over? </li></ul></ul><ul><ul><li>Will US growth continue? </li></ul></ul><ul><li>Closer to home… </li></ul><ul><ul><li>Negative real yields </li></ul></ul><ul><ul><li>Fiscal austerity </li></ul></ul><ul><ul><li>Eurozone fallout </li></ul></ul><ul><li>Demise of the ‘safe haven’ asset? </li></ul>… but investors still need to achieve their investment goals Setting the scene
  4. 4. Using a multi-asset approach to navigate volatile markets <ul><li>Allocate assets across a global opportunity set </li></ul><ul><li>Adjust portfolios in response to changing market conditions </li></ul><ul><li>Make risk management a part of every investment decision </li></ul><ul><li>Don’t underestimate the impact of costs </li></ul>Multi-asset portfolios can offer a smoother ride Important considerations
  5. 5. Europe: Time to decide to break up or not break up? <ul><li>Either the current structure will have to change, or the current membership will have to change </li></ul><ul><li>The cost of a weak country leaving the euro is significant </li></ul><ul><li>The economic cost is, in many ways, the least of the concerns investors should have about a break-up </li></ul><ul><li>Recent talks about the possibility of a revised treaty </li></ul>Source: UBS Investment Bank, 6 September 2011, UBS Global Asset Management Under the current structure and with the current membership, the euro does not work
  6. 6. Asia: Can China avoid a hard landing? Japanese growth extrapolation proved too optimistic Source: Datastream, UBS Global Asset Management Ballooning investment spending in China Source: Datastream, UBS Global Asset Management Market extrapolation high growth rate Here is what actually happened United States Japan
  7. 7. US: Starting the slowing cycle from a weak position …… and a bigger negative output gap Source: UBS Global Asset Management, as of 30 November 2011 The US starts a slowdown from a: … ..higher US unemployment rate Source: UBS Global Asset Management, as at 30 November 2011
  8. 8. We are not currently positive on equities Source: UBS Global Asset Management 1 Applicable to global equity only 30 November 2011 Fund Manager Position 1 Earning Revision Economic Surprise Index 1 Monetary Policy Support Stress Index 1 Fed Model Valuation ValMod Economic Cycle Valuation Market Behavior Equity Positive Equity Negative Equity Neutral Recession Recovery Slowdown Expansion
  9. 9. Credit remains attractive Source: Datastream, Moody’s, UBS Global Asset Management As of 31 October 2011 US High Yield US-I
  10. 10. Index-linked gilts look attractive relative to nominal bonds Source: Datastream, UBS Global Asset Management. Note: Data to 30 November 2011 UK inflation and 10 year breakeven inflation rates Range-bound nature of breakeven inflation
  11. 11. Asset allocation is primary determinant of returns <ul><li>Asset mix decision: </li></ul><ul><ul><li>primary determinant of returns in long term </li></ul></ul><ul><li>Active decisions: </li></ul><ul><ul><li>Can generate additional returns </li></ul></ul><ul><ul><li>Can help to control risk </li></ul></ul><ul><ul><li>Can help to navigate volatile markets </li></ul></ul><ul><ul><li>Can be used to achieve a targeted outcome </li></ul></ul>1 Gary P. Brinson, L. Randolph Hood and Gilbert L. Beebower, “Determinants of Portfolio Performance,” The Financial Analysts Journal, July/August 1986; and Gary P. Brinson, Brian D. Singer and Gilbert L.Beebower, “Determinants of Portfolio Performance, II: An Update,” The Financial Analysts Journal, May/June 1991. UBS asset allocation study: contribution to returns Strategic asset allocation can help manage risk and smooth returns Other 2.1% Security Selection 4.6% Allocation Policy 91.5% Market Timing 1.8% Asset
  12. 12. Tactical decisions can enhance returns Source: Gilts: FT Over 15 year Gilt Index sourced from Mellon. US Equities: S&P 500 index sourced from Lipper. Corporate Bonds: Iboxx Sterling non-Gilt All Stocks index sourced from Mellon. UK Equities: FTSE All Share index sourced from Mellon. Overseas Bonds: Datastream. Real Estate: Investment Property Forum Consenus Forecasts released on 24 November 2011. Emerging Markets Equities: MSCI Emerging Markets index sourced from Lipper. All data for 2011 to 31 December 2011 except Real Estate as noted. TOP BOTTOM Position Movement of UK Equities returns No single asset class delivers consistent top performance
  13. 13. Cost is another significant determinant of investor returns Source: UBS Global Asset Management, Datastream Note: As at 30 November 2011. Portfolio consists of 65% FTSE All-Share (total return) and 35% FTSE British Government All-Stocks Index (total return). Assumes starting value of £100 with monthly contributions of £100. Since 1976, a fund with a TER of 2.4% would leave an investor contributing £100 a month with just 70% of the value of an identical fund with a TER of 1.1%
  14. 14. The importance of multi-asset investing <ul><li>The world is uncertain </li></ul><ul><li>Take a diversified, multi-asset approach </li></ul><ul><li>Dynamically manage to adapt to rapidly changing market conditions </li></ul><ul><li>Understand the impact of costs on overall performance </li></ul><ul><li>Funds available for different target outcomes: </li></ul><ul><ul><li>Income: UBS Multi-Asset Income Fund </li></ul></ul><ul><ul><li>Capital growth: UBS Global Diversified Fund </li></ul></ul>US-R Investors need a flexible approach to navigate volatile markets
  15. 15. SECTION 2 UBS – multi-asset specialists
  16. 16. A ‘lost’ period for equities but… … not for UBS multi-asset strategies Long-term performance vs. equity indices, 2000 – 2011 Source: UBS Global Asset Management, as at 30 November 2011 Note: Past performance is not a guarantee for future returns. GSP is a multi-asset composite. Total return over period UBS GSP 96.2% HFRI FoF Index 48.1% MSCI World USD 9.2%
  17. 17. Building a diversified portfolio <ul><li>112 employees across the world; multi-asset portfolio managers on 3 continents </li></ul><ul><li>15 PhDs and 66 professional designations spanning investing disciplines </li></ul>USD 97.5bn assets under management Trade ideas Trade ideas Trade ideas Trade ideas Trade ideas Portfolio Construction Objectives Regulations UBS multi-asset funds Portfolio Manager <ul><li>Trade selection </li></ul><ul><li>Oversight </li></ul>Risk Management team <ul><li>Oversight </li></ul><ul><li>Allocation advice </li></ul>UBS multi-asset team Source: UBS Global Asset Management.
  18. 18. SECTION 3 Introducing the UBS Global Diversified Fund
  19. 19. What is the UBS Global Diversified Fund? <ul><li>The UBS Global Diversified Fund offers lower cost access to long-term capital growth by allocating to a diversified mix of asset classes </li></ul><ul><li>Global diversified growth strategy </li></ul><ul><li>Long-term exposure to multiple asset classes, including alternatives </li></ul><ul><li>A more sophisticated investment choice than traditional balanced funds </li></ul><ul><li>Cost efficient: </li></ul><ul><ul><li>RDR share class: 0.4% p.a. </li></ul></ul><ul><ul><li>Retail share class: 0.9% p.a. (including 0.5% p.a. annual commission) </li></ul></ul><ul><li>Targets two-thirds of equity market returns with half the volatility </li></ul>Key characteristics Addressing clients’ evolving needs
  20. 20. A diversified offering and approach to managing portfolios Emerging market debt Emerging market equities Developed equities Government bonds Diversification is achieved on many levels Investment grade credit Property Commodities Hedge funds By asset class By trade type/horizon By source of return By region High yield credit UK US Europe Asia Emerging Markets Strategic allocation Tactical asset allocation Active currency management Relative value Time horizon Economic scenario Directional
  21. 21. UBS Global Diversified Fund Cash² Equities Up to 60% Bonds Up to 100% Alternatives¹ Up to 40% Source: UBS Global Asset Management Note: As at 31 December 2011 . Current indicative ranges - ranges will be reviewed periodically as new asset classes become available or the investable universe changes. 1 Alternative asset classes as defined by UBS Global Asset Management. 2 Cash exposure includes combination of physical and synthetic cash Market exposures Current market exposures: incorporating tactical views
  22. 22. UBS Global Diversified Fund Source: UBS Global Asset Management. 1 Based on key decision makers within the Asset Allocation & Currency team Summary of opportunity
  23. 23. SECTION 4 Introducing the UBS Multi-Asset Income Fund
  24. 24. Traditional sources of income remain under pressure <ul><li>Inflation above Bank of England target </li></ul><ul><li>Bank rates remain at historic lows </li></ul><ul><li>Government bond yields low </li></ul><ul><li>Corporate bonds – spreads are volatile </li></ul><ul><li>Annuity rates – under pressure </li></ul><ul><li>Dividends rising from low levels </li></ul>Interest rate/yield (%) Source: Bloomberg, DataStream and ONS. Note: As at 07 December 2011 1 Launched 16 November 2009 MAI fund launch 1
  25. 25. UBS Multi-Asset Income Fund <ul><li>Diversification across asset classes </li></ul><ul><li>Combining different sources of income can generate more stable yields and lower price volatility </li></ul><ul><li>Diversification within asset classes </li></ul><ul><li>Within one asset class, we seek geographical diversification so as to generate a more stable yield </li></ul><ul><li>Offering potential for inflation protection </li></ul><ul><li>Inclusion of real rate / index-linked government bonds component to reduce exposure to inflation risk </li></ul><ul><li>Enhancing income from equities by the use of covered call options </li></ul><ul><li>Selling potential upside from rising equity markets generates additional income </li></ul>Asset allocation actively and dynamically set towards higher yielding asset classes, taking into consideration diversification
  26. 26. Current investment strategy Source: UBS Global Asset Management Note: Data as at 31 December 2011 UBS Multi-Asset Income Fund High Yield 8.75% Real Estate 24.00% Investment Grade Bonds 27.75% Index-Linked Bonds 39.50%
  27. 27. UBS Multi-Asset Income Fund: summary Current yield of 4.8% p.a. 1 Source: UBS Global Asset Management. 1 Distribution yield 4.8% p.a. as at 31 December 2011. The yield figure shown is for the A Acc share class. The distribution yield reflects the amount that may be expected to be distributed over the next twelve months as a percentage of the current share price. The calculation does not include any preliminary charges and investors may be subject to tax on distributions. 2 TER available on request
  28. 28. SECTION 5 Appendix
  29. 29. UBS Global Diversified Fund 1 Swing pricing applies (see prospectus for details) . 2 A Shares accumulation (net) 3 K Shares accumulation (net) 4 R Shares accumulation (net) 5 Fund charges relate to OEIC and ISA investments for the A Share class and R Share class Fund details
  30. 30. UBS Multi-Asset Income Fund 1 The investment manager’s target income is one month sterling LIBOR plus 3% net of fees. This target is not part of the fund’s stated investment objective or policy in its prospectus and is not guaranteed 2 As at 31 December 2011. 3 Swing pricing applies to all daily subscriptions and redemptions except those of the last day of the calendar year, when swing pricing will be waived to ensure maintenance of the foreseen value preservation level. 4 A Shares accumulation (net) 5 A Shares income (net) 6 Fund charges relate to OEIC and ISA investments for the A Share class Fund details
  31. 31. Asset allocation changes in the Multi-Asset Income Fund Monthly strategy asset class weights of Multi-Asset Income Fund (UK) – Data to 31 December 2011 Source: UBS Global Asset Management
  32. 32. Current yield 4.8% p.a. 1 Source: UBS Global Asset Management. Note 1 Distribution yield 4.8% p.a. as at 31 December 2011. The yield figure shown is for the A Acc share class. The distribution yield reflects the amount that may be expected to be distributed over the next twelve months as a percentage of the current share price. The calculation does not include any preliminary charges and investors may be subject to tax on distributions. Note: Income distribution dates as follows: 1 December 2009, 1 March 2010, 1 June 2010, 1 September 2010, 1 December 2010, 1 March 2011, 1 June 2011, 1 September 2011, 1 December 2011
  33. 33. Important information <ul><li>This document is for Professional Clients only. It is not to be distributed to or relied upon by Retail Clients under any circumstances. </li></ul><ul><li>Past performance is not a guide to future performance. The value of investments and the income from them may go down as well as up and are not guaranteed. Investors may not get back the amount originally invested. Changes in rates of exchange may cause the value of this investment to fluctuate. </li></ul><ul><li>The Fund will use derivatives as part of its investment capabilities which will include short positions. These instruments carry a material level of risk and the Fund could be potentially exposed to enhanced/magnified falls, should the market move against them. The Fund is also subject to counterparty risk. As the annual management fee of the Fund is charged to capital, the potential capital growth of the Fund will be reduced. </li></ul><ul><li>This document is a marketing communication. Any market or investment views expressed are not intended to be investment research. The document has not been prepared in line with the FSA requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. The information contained in this document should not be considered a recommendation to purchase or sell any particular security and the opinions expressed are those of UBS Global Asset Management and are subject to change without notice. Furthermore, there can be no assurance that any trends described in this document will continue or that forecasts will occur because economic and market conditions change frequently. </li></ul><ul><li>Issued in January 2012 by UBS Global Asset Management (UK) Ltd, a subsidiary of UBS AG, 21 Lombard Street, London EC3V 9AH. Authorised and regulated by the Financial Services Authority. Telephone calls may be recorded. © UBS 2012. The key symbol and UBS are among the registered and unregistered trademarks of UBS. All rights reserved. </li></ul>www.ubs.com/ifa | 0800 587 2111

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