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UBS_Presentation_for_Southampton_University_Wealth_Management

The distinguished lecture from the Executive Director, Wealth Management Head of South and South East UK at UBS, Martyn Begbour. Exclusively for the University of Southampton Investment and Finance Society.

UBS_Presentation_for_Southampton_University_Wealth_Management

  1. 1. Martyn Begbour, Executive Director & Desk Head South & South West An Introduction to UBS Wealth Management
  2. 2. 1 Career background HSBC undertaking a variety of roles inc. • Head of Marketing & Business Development, Private Clients • Senior Manager, Investment Products, HSBC International, Jersey Coutts & Co Private Bank • Client Partner UBS Wealth Management • Desk Head, South & South West
  3. 3. UBS – Wealth Management at the core UBS is one of the world’s leading financial firms We are present in all major financial centers and employ about 60,000 people in over 50 countries Wealth Management Wealth Management Americas Global Asset Management  Provides superior investment advice and solutions for private clients  Sophisticated investment process and research  Present in over 40 countries, including Switzerland  Offers advice-based solutions through financial advisors  Integrated set of products and services designed to address the needs of individuals and families  Large scale asset manager  Well-diversified businesses across regions, capabilities and distribution channels  Offers investment capabilities across all major traditional and alternative asset classes for private clients, financial intermediaries and institutional investors  Offers research, equities, foreign exchange, precious metals and tailored fixed income services  Provides advisory services, financial solutions and access to capital markets for corporate, institutional and wealth management clients Investment Bank
  4. 4. Financial strength 3 1,936 1,353 999 173 30.5 2,017 0 500 1000 1500 2000 Bank of America UBS¹ Credit Suisse JPMorgan Barclays² RBS3Credit ratings as of 20.10.14, unless otherwise indicated Source: UBS AG 1 Source: Company websites Wealth management invested assets as at Q2 2014 (CHF bn) 1 Assets include Wealth Management and Wealth Management Americas 2 Figures as at 31.03.14 3 Figures as at 31.07.14 Source: Company reporting Data as at end Q3 2014 unless otherwise indicated. Figures will be updated on the next publication of UBS's results (28 October 2014 for Q3 2014) Long term credit ratings S&P's Moody's Fitch UBS AG A A2 A Credit Suisse Group AG A- (P)A2 A HSBC Holdings Plc A+ Aa3 AA- JPMorgan Chase & Co A A3 A+ Bank of America Corp A- Baa2 A Barclays Plc A- (P)A3 A Citigroup Inc A- Baa2 A Royal Bank of Scotland Group Plc1 Baa2 BBB+ A Lloyds Banking Group Plc1 A A1 A BIS Basel III common equity tier 1 ratio as at 28.10.14(%) – fully applied* * UBS and Credit Suisse - BIS Basel III framework came into effect on 01.01.13, for other banks, ratios shown represent pro-forma Basel 3 estimates as disclosed by the companies. 2 As at 31.03.2014 Source: Company data and broker reports. Date as of 30.06.14 unless otherwise indicated. Figures will be updated on the next publication of UBS's results (10 February 2015 for Q4 2014) *- indicates rating is under review for a possible downgrade *+ indicates rating is under review for a possible upgrade 9.5 9.5 10.6 9.8 9.6 10.8 13.7 0 2 4 6 8 10 12 UBS Credit Suisse Bankof America Citigroup JPMorgan Barclays² HSBC²
  5. 5. UBS Wealth Management in the UK  An established presence in the UK since 1999 – Around 850 employees1 – More than 200 Client Advisors1  Serving over 15,000 clients across the UK  Over 100 Investment Products and Service professionals1, including wealth planning specialists focused on delivering UK tax-effective solutions**  Dedicated teams to support clients with specific needs including family offices, charities, intermediaries, professionals and executives  One of the Top 5 UK wealth managers by invested assets2  Recognised as the best private bank in the UK and No 1 in the UK for High Net Worth II ($10m to $30m) and Family Office services3 Jersey (St. Helier) London Birmingham Manchester Newcastle Edinburgh 1 As at 28.10.14. All figures rounded. 2 Source: PAM Insight Ltd, 2014 3 Source: Euromoney Private Banking Survey 2014 Source: UBS Wealth Management ** UBS does not provide tax advice Figures will be updated on the next publication of UBS's quarterly results (10 February 2015 for Q4 2014) A network of regional offices and teams* to ensure fast and reliable access to our specialists Leeds *Team of 4 Client Advisors covering South and West of Britain
  6. 6. Your wealth management team  Your Client Advisor is your main point of contact and is responsible for your relationship.  Your Client Advisor is directly supported by a Deputy Client Advisor, Client Advisor Assistant and the wider Client Advisory Team.  You investment solution is supported by the expertise of UBS Investment Products and Services.  This is underpinned by the global buy-side research capabilities of UBS Chief Investment Office Client …supported by the global capabilities and resources of UBS A single point of contact… Client Advisor Product Specialists / Portfolio Managers Investment Specialists Lending Specialists Wealth Planning Specialists Chief Investment Office Client Advisory Team Investment Products & Services
  7. 7. Client solutions: the whole of UBS at your fingertips  Asset structuring  Tax planning  Retirement & insurance planning  Succession planning  Relocation planning  Financial planning  Strategic & tactical asset allocation: discretionary & advisory solutions  Liquidity management  Alternative investments: hedge funds, real estate & private equity where suitable  Structured products  Foreign exchange You benefit from the global expertise of the whole of UBS  Corporate Employee Financial Services (CEFS)  Corporate Pensions  Philanthropy services  Banking products  Secured lending for liquidity solutions  Mortgage services Investment solutions Wealth planning Liability management Special services UBS does not provide tax advice
  8. 8. Worldwide recognition A bank recognized by peers and experts all over the world Euromoney Magazine has named UBS "Best Global Private Bank 2014" and honoured UBS with the Award for Excellence as "Best Global Bank 2014" Scorpio Partnership's Global Private Banking Benchmark 2014, confirmed UBS as the largest and fastest- growing wealth manager in the world Euromoney Private Banking & Wealth Management Survey1 Global awards include:  Best Global Private Bank  Individuals with US$10-30 million in assets  Family Office Services  Inheritance and Succession Planning  Philanthropy Services  Inherited wealth and business  Bespoke wealth planning  Product related awards:  Range of Investment Products  Structured Products  Commodities Investment  Luxury Investment (non-art)  Best Global Private Bank3  Best Performing Private Bank  Best Brand in Private Banking  Outstanding Global Private Bank 4 WM UK awards include:  Best private banking services overall  Individuals with US$1–10million in assets  Individuals with US$10-30million in assets  Range of investment products  Range of advisory services  Family office services  Foreign exchange  Fixed income portfolio management  Private equity investment (joint)  Hedge fund investment WM Jersey awards include:  Individuals with more than US$30million in assets  Range of investment products  Structured products  Hedge fund investment  Philanthropy services (joint)  Best Global Bank 2  Best Private Bank (WM UK) 7  UK Private Bank–Wealth Planning team 5  Swiss-based Private Bank – International Clients team  UK-based private bank: HNW Team 6  UK-based private bank: Charity Team Source: 1 Euromoney, Private Banking Survey & Wealth Management Survey, February 2014 2 Euromoney Awards for Excellence, July 2014 3 PWM The Banker, October 2013 4 Private Banker International, October 2013 5 Wealth Briefing Awards 2013 6 Wealth Briefing European Awards 2013 7 Mortgage Strategy Awards 2013 Other Global awards include: Other WM UK awards include:
  9. 9. 8 The way to an individual investment solution Asset profile Risk profile  Your asset situation  Risk tolerance & risk capacity  Absolute return/relative return Financial planning Investment proposal  Wealth optimisation  Tax optimisation  Liquidity & retirement planning  Simulation of solution alternatives  Tailored investment solution Organisation of investment solution  Full/partial delegation  Selection of managers/investment vehicles  Periodic meetings & reviews Review  Review of retirement & tax situation  Review of investment results Understand Propose Agree and Implement Review The four step advisory process guides us to an agreed solution Please always read in conjunction with the glossary of terms and the disclaimer information at the end of the document.
  10. 10. 9 The resultant risk profile and asset allocation is the starting point of our investment strategy discussion  The risk profile assesses your overall risk tolerance  Your overall risk tolerance is influenced by a multitude of factors – Subjective factors (e.g. your past investment experience, personal needs and goals, and familiarity with complex financial offerings) – Objective factors, (e.g. your current financial situation, investment structure and investment time horizon) The assessment of your overall risk tolerance will allow us to evaluate whether the entirety of your assets and liabilities matches your general attitude towards risk. The risk profile questionnaire will determine whether your risk tolerance is low, medium or high (matching to Fixed Income, Yield, Balanced, Growth and Equity profiles). Risk assessment Your risk profile is developed and evaluated For illustrative purposes only. Please always read in conjunction with the glossary of terms and the disclaimer information at the end of the document. Please always read in conjunction with the glossary of terms and the disclaimer information at the end of the document.
  11. 11. 10 Risk profile Description Conservative without Equities (portfolio risk profile only) • Long-term preservation of assets • Return: mainly ongoing earnings from interest • Minimal volatility of asset value expected Conservative • Long-term preservation of assets • Return: mainly ongoing earnings from interest and dividends, supplemented by modest capital gains • Low volatility of asset value expected Moderate • Long-term appreciation of assets • Return: ongoing earnings from interest and dividends, supplemented by capital gains • Medium volatility of asset value expected Aggressive • Substantial long-term appreciation of assets • Return: mainly achieved by capital gains, complemented by generally low ongoing earnings from interest and dividends • High volatility of asset value expected Your risk profile We match your total and individual portfolio return requirements with your risk tolerances For illustrative purposes only. Please always read in conjunction with the glossary of terms and the disclaimer information at the end of the document.
  12. 12. 11 Understanding the relationship between risk and return (GBP) We match your total and individual portfolio return requirements with your risk tolerances Illustration of the relationship between risk and return Potential Upside Potential Downside Annualised Return Annualised Volatility 5.7% 16.1% -6.0% 5.1% Conservative 7.5% 20.60% -8.8% 5.9% Moderate 9.9% 26.2% -12.5% 6.8% Aggressive Conservative No Equities 2.6% 8.1% -2.0% 3.1% Conservative No Equities Source: UBS QIS tool. This is based on forward looking estimates as of August 2014 for portfolio risk and return of UBS model portfolios. Range of returns is measured to the 95% Confidence Interval (1.96 x annualised volatility). UBS long term annualised forecasts in GBP. Equity exposure un-hedged. Portfolio rebalanced monthly to target SAA. For illustrative purposes only. Slide is based on UBS simulations, using as source information on actual past performance of financial indices over the specified time horizon. Past performance or historic results provide no indication of future returns. Forward looking or future projections should not be construed as a guarantee. This page is always to be read in conjunction with the risk information and explanations of terms appended to this presentation.  Investments with greater return potential also carry greater risk  However, this is not a 1 for 1 relationship and significant additional risk can be associated with incremental return  For these reasons we will continue to monitor your risk tolerance to ensure your portfolio matches it Why is it important to understand risk?
  13. 13. 12 Asset allocation Asset classes and asset allocation  Diversification – History shows that not all asset classes move in the same direction at the same time  Risk management – Some assets have proven to be “riskier” than others in the past – The selected asset allocation should be matched to your perceived risk tolerance  Avoid market timing – If an investor could predict which asset classes would do best in a specific time period there would be no need for asset allocation  An asset class is a broad category of investments that exhibit similar sensitivities to market conditions  Strategic asset allocation determines efficient allocations of these broad categories to suit your investment time horizon and risk tolerance Why is it important to have a strategic asset allocation? Please always read in conjunction with the glossary of terms and the disclaimer information at the end of the document.
  14. 14. 13 Diversification is critical Diversification and a dynamic, market- driven investment process are key When analysing historical annual returns on various asset classes, differences in annual returns become very clear Liquidity Real estateBonds Hedge fundsEquities Commodities Historical annual returns of selected asset classes 2002 – 2012 Highest return Lowest return 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 The best-performing asset classes change over time For illustrative purposes only. Past performance is not an indication of future returns. Markets are subject to change and returns may vary. The above asset classes, asset allocation and investment instruments are indicative only and can be changed at any time at UBS’ discretion. Please always read in conjunction with the glossary of terms and the disclaimer information at the end of the document. Source: UNS Quantitative Investment Solutions.
  15. 15. 14 Portfolio diversification Our mandates are well diversified and are designed to capture an optimal asset blend Traditional asset mix Typical UBS solution Bonds Equities Liquidity Real Estate Funds Private Equity Sector Equity Funds Active Equity Funds Hedge Funds Single Global Equities Single Bond Holdings Regional Equity Funds Commodities For illustrative purposes only. Please always read in conjunction with the glossary of terms and the disclaimer information at the end of the document. Corporate Bond Funds Investment Grade Bond Funds Liquidity
  16. 16. 15 Open architecture – our philosophy  Why is open architecture important? – No one investment house consistently outperforms in all asset classes – A collection of specialists is better positioned to meet and exceed your investment goals  Flexibility and objectivity of selection: – Our mission is to identify and secure access to the best investment management talent in each asset class – We are impartial to solutions offered in-house or by third parties – We have long track-record of selecting leading managers globally – We have significant assets invested with third party managers, giving us vast economies of scale representing over 470 approved funds as at Dec 2010 selecting leading third party managers and funds to use in combination with our in- house portfolio management capabilities UBS and its subsidiaries are significant players in 'open architecture' Please always read in conjunction with the glossary of terms and the disclaimer information at the end of the document.
  17. 17. Investment process We aim to generate excess return from two complimentary sources 16 Chief Investment Office Investment Management Tactical Asset Allocation Security Selection Bonds Equity Hedge Funds Cash FX Active Funds Passive Funds Equities Fixed Income Hedge Funds Wealth Management Investment Bank Asset Management Your Portfolio Please always read in conjunction with the glossary of terms and the risk information at the end of this presentation
  18. 18. Tactical asset allocation & the UBS House View Harnessing our global research network 17For illustrative purposes only Please always read in conjunction with the glossary of terms and the risk information at the end of this presentation
  19. 19. PM Global strategies Long term strategic asset allocation and expected risk & return¹ Potential Upside Potential Downside Annualised Return Annualised Volatility Cash 5% GBP Bonds 60% USD Corps 25% HY & EM 10% 2.6% 8.1% -2.0% Global Fixed Income 3.1% Cash 5% GBP Bonds 25% USD Corps 30% HY & EM 10% UK Equity 13% Global Equity 17% 5.7% 16.1% -6.0% Global Yield 5.1% Cash 5% GBP Bonds 20% USD Corps 20% HY & EM 8% UK Equity 20% Global Equity 27% 7.5% 20.6% -8.8% Global Balanced 5.9% Cash 5% UK Equity 38% Global Equity 57% 13.4% 34.5% -18.2% Global Equity 8.2% Cash 5% GBP Bonds 11% USD Corps 10% HY & EM 8%UK Equity 28% Global Equity 39% 9.9% 26.2% -12.5% Global Growth 6.8% 18 For illustrative purposes only. Source: UBS QIS tool. Based on 10 year forward looking capital market assumptions as of 29 August 2014. Equity exposure unhedged. Portfolio rebalanced quarterly to target SAA. Forward looking or future projections should not be construed as a guarantee. ¹Please see the Appendix A for details of the underlying indices which make up the asset allocations for each of the above model portfolios. Please always read in conjunction with the modelling process description in the glossary of terms and risk information at the end of this presentation.
  20. 20. Portfolio structuring
  21. 21. Strategic cash advice 20 Issues/Background  Safety is your basic need: To keep what you have, to react to unforeseen events  Cash makes you feel safe: Cash is a safe haven, and is available at short notice  But Cash has its price: low yield  Aren’t you missing something? Solutions  UBS can help you find out:  (1) How much you really want to keep in cash  (2) How to structure the solution addressing your cash needs  (3) Which further opportunities exist that suit you Benefits + You know that you keep the right amount in cash + You know you have done the right thing with the rest Solutions Stay in cash: safe and liquid  With daily liquidity: Current Account, Fiduciary Call, Call Deposits, MM Certificates, Libor Accrual Certificate  For longer tenors: Fiduciary Fix, Fixed Term Deposits, Money Market Funds or Structured Notes (e.g., Trend Accrual Bill, higher risk with higher yield opportunities) Create opportunities  Understand your investment goals  Look for investments that fit your needs Überschuss- liquidität Iron Reserve For asset portfolio Consumption cash Excess liquidity Gathered cash  accounts  money market investments The rest, excess liquidity! To buy & sell securities, wait for market opportunities For critical eventualities, ”to sleep well” To pay daily bills, for planned purchases UBS Cash Analysis Notes: For illustrative purposes only.
  22. 22. 21 Lending Solutions For Illustration purposes only. Issues/Background  You identify short or medium term investment opportunities that would complement your existing overall investment strategy. You aim to increase your expected return while taking additional risk (leverage portfolio to enhance yield, diversification)  You need short to medium term liquidity to cover expenditures e.g., − For consumption (aircraft, yacht, tax, etc.) − Working capital for own operating company − Bridge finance and hedging facilities for asset pooling structures (e.g., private placement funds)  You require financing of privately used real estate, residential investment properties and commercial properties Solutions  Our specialists will advise you in accordance with your needs. Our Lombard loans are a quick source of liquidity for any kind of purpose  Lombard loans allow creation of yield-enhancement- through-leverage solutions  Structured credit facility secured by eligible and marketable − Single stock positions − Hedge fund positions − Emerging market portfolios − Life insurance policy  Tailor-made real estate financing model that takes your asset, retirement planning and tax situation into account Benefits + Quick and easy access to liquidity for a multitude of purposes in all currency as required + Tailor-made solutions with desired risk return profile + No distortion of current asset allocation and avoidance of transaction costs while bridge financing with a loan + Mortgage advisory services integrated into a comprehensive financial planning approach from the expertise of the market leader in the Swiss mortgage market Lombard Loan Cash Equity Fixed Income Commodities Alternative Investments Liquidity  Short-medium term liquidity needs  Boat, car, real estate purchase  Liquidity for Client’s own company Yield enhancement  Additional financing source for a leveraged investment in combination with client’s available cash  Client portfolio as collateral  Financing purposes Lombard Loan
  23. 23. UBS Mandates 22 •All-cycle Mandates for Delegators – Scenario and Advisory Mandates for Advice Seekers If you want to delegate the management of your assets to our investment specialists, a UBS Discretionary Mandate might be the right service for you. If you want to take the investment decisions yourself while enjoying all benefits of pro-active market analysis and investment advice, a UBS Advisory Mandate might be the right service for you.  Focus on preservation of your capital while seeking for potential participation in positive market trends (no capital protection or guarantee)  Focus on risk management  Long-term investment horizon  Focus on outperforming defined benchmark through active management and instruments selection  Permanent participation in long- term growth of financial markets  Risk defined by chosen investment strategy  Long-term investment horizon Stability Participation Discretionary Mandates (All-cycle Mandates) Discretionary Mandates (Scenario Mandates)  Focus on a specific economic scenario and/or market opportunity  Risk defined by chosen Scenario Mandate  Investment horizon driven by scenario Advisory Mandates  Choice of flexible solutions adapted to individual needs  Investment decision taken by clients based on advice from investment specialist and client advisor  Regular monitoring of portfolio and risks by investment specialist For Delegators For Advice Seekers Please refer to the disclaimer at the end of this presentation
  24. 24. 23 Building your portfolio Our robust portfolio construction combines multiple elements 1 Commodities do not form part of the Strategic Asset Allocation. 2 NTAC = Non-traditional asset classes, where suitable. 3 Single stocks and bonds may be used if deemed to be relevant. For illustrative purposes only. Markets are subject to change and returns may vary. The above asset classes, asset allocation and investment instruments are indicative only and can be changed at any time at UBS' discretion. Please always read in conjunction with the glossary and the risk information at the end of this document. 4 Within an Open Ended Investment Company – The Resolution OEIC (please see page 8 for more details). Investment amounts below GBP 500k will be invested into a fund Selecting the optimal instruments Constructing your portfolio Determining your strategic asset allocation Determining tactical asset allocation  Income requirements4  Active management  Transparent  Tax efficiency4  Unitised4 and segregated options Liquidity Equities Real Estate Hedge Funds Commodities1 Bonds + + + Liquidity Bonds Equity NTAC2 TAA TAA TAA TAA Direct investments3 Passive funds Active funds UBS does not give tax advice and you should consult your independent tax adviser for specific advice before entering into or refraining from entering into any investment
  25. 25. Portfolio structure 24 Core and satellite investing Core (typical allocation range 60% - 80%)  Typically managed on long term discretionary basis  Strategic Asset Allocation (SAA) = long term target allocation neutral position  Tactical Asset Allocation (TAA) = short term tactical deviations from SAA Satellite (typical allocation range 20% - 40%)  Access to asset classes and investments on an opportunistic basis  For example: Oil, Foreign Exchange, German Equities  Investment ideas / themes discussed with you Core / Satellite Objectives Illustrative Strategy Core multi asset class discretionary solution FX Ideas Structured Products Thematic Opportunities Alternatives Cash Portfolio For illustrative purposes only. Please always read in conjunction with the glossary of terms and the disclaimer information at the end of the document.
  26. 26. 25 A core and satellite approach Product Specific Details For illustration purposes only. This page is always to be read in conjunction with the risk information and explanations of terms appended to this presentation. Moderate / Aggressive Investment Portfolio Structured Products £300k £10m Investment Overview TM UBS (UK) Global Balanced Fund • Objective is appreciation of assets in the long term - return is composed of capital gains with a moderate current income from interest and dividends. • Investment breakdown – 45% Bonds, 20% UK Equities, 30% Global Equities, 5% Cash. TM UBS (UK) UK Income Focus Fund • Objective is appreciation of assets in the long term. Return is composed of current income from interest and dividends as well as capital gains. Investment breakdown – 35% Bonds, 48% UK Equities, 12% Global Equities, 5% Cash TM UBS (UK) UK Balanced Fund • Objective is appreciation of assets in the long term - return is composed of capital gains with a moderate current income from interest and dividends. • Investment breakdown – 45% Bonds, 20% UK Equities, 30% Global Equities, 5% Cash.. TM UBS (UK) Global Growth Fund • Objective is substantial appreciation of assets in the long term - return is composed of capital gains and generally low current income from interest and dividends. • Investment breakdown – 25% Bonds, 28% UK Equities, 42% Global Equities, 5% Cash. TM UBS (UK) Global Equity Fund • Objective is to maximize appreciation of assets over the long term - return is composed of capital gains. • Investment breakdown – 38% UK Equities, 57% Global Equities, 5% Cash. Discretionary portfolios x 2 (Fixed Income & Global Yield) £ Discretionary portfolios x 2 (Fixed Income TM UBS (UK) UK Income Focus Fund £2m TM UBS (UK) Global Balanced Fund £2m Offshore Bond TM UBS (UK) Global Equity Fund £750k TM UBS (UK) Global Growth Fund £750k Thematic Investments £500k Targeted Return Fund £200k Advisory Portfolio (see following slides) TM UBS (UK) UK Balanced Fund £3.5m
  27. 27. 26 Advisory Portfolio The investment objectives above are assumed. To give you a tailored investment proposal we will understand your specific requirements. Thematic Investments Water - £250k • The supply of clean water is constrained by the lack of infrastructure in emerging markets and an aging water infrastructure in developed regions. • Climate change, urbanization and the emerging markets' stronger focus on the industrial sector are also having a negative impact on water supply. • Companies exposed to these trends are an ideal way to benefit from this development. US Technology - £250k • The US Tech sector trades at a slight discount to the US market versus its average premium of 20% over the last 18 years. • We believe the lower-than-normal valuation is unjustified given strong product cycles and a cyclical pickup in enterprise tech demand. • Below-average aggregate sector earnings volatility, strong balance sheets and a growing focus on increasing dividends and share repurchases are all attributes that should further bolster sector valuations. Targeted Return Fund Baring Multi Asset Fund - £200k • The investment objective of this fund is to generate a capital return which exceeds UK inflation over the medium to long term (RPI + 4%). • The fund will hold a diversified portfolio of investments in a range of asset classes including equities, fixed interest securities, property, gold, commodities and cash. • The fund may also invest in alternative asset classes (eg private equity and hedge funds), near cash, deposits and money market instruments.
  28. 28. 27 Advisory Portfolio The investment objectives above are assumed. To give you a tailored investment proposal we will understand your specific requirements. Structured Products UBS 4 Year Step Down linked to US and Canadian Equities - £150k • Linked to S&P 500 and TSX 60 (Toronto Stock Exchange). • Autocall levels 100% of strikes year 1, 95% year 2, 90% year 3 and 85% year 4. • Current indicative coupon 8.5% per annum. • 65% European capital protection barrier. • Note subject to capital gains tax. • Issued by UBS AG, Jersey. Goldman Sachs 4 Year Defensive Autocallable Note Linked to UK, US and European Equities - £150k • Linked to FTSE 100, S&P 500 and Eurostoxx 50. • Autocall levels 100% of strikes year 1-3, 60% in year 4. • Current indicative coupon 8.5% per annum. • 60% European capital protection barrier. • Note subject to capital gains tax. • Issued by Goldman, Sachs & Co. Wertpapier GmBH, Frankfurt, Germany.
  29. 29. Glossary of terms (1 of 2) Alpha: excess return over a benchmark. Alternative Investments: are non-traditional investments which do not fall within the traditional asset classes such as equities, bonds or money market products. Alternative investments include hedge funds, private equity, real estate and commodities and are often referred to as non-traditional asset classes (NTAC). Such investments might have higher levels of risk than traditional investments, including (but not limited to), higher volatility, illiquidity, complexity and a lack of transparency. Annualised Return is a compound annual growth rate. Asset Allocation: composition of a portfolio by currency and asset class. Benchmark: reference parameter (e.g. a share index or a portfolio of indices) to compare the performance of a portfolio. A benchmark that is an index is also called a reference index. Corporate Bonds: combination of higher duration risk (1-10 year maturity) and credit risk (BBB rated and above) makes this our highest yielding bond investment strategy. Customised: mix of single line bond strategies (Conservative, Short-dated Corporates and Corporate) along with fund selection across Investment grade, High Yield and Emerging markets. EMMA: emerging markets, which may offer higher levels of risk and return than more developed investment markets. Equity Risk Premia: The additional return an investor expects to compensate for the additional risk associated with investing in equities as opposed to investing in a riskless asset (typically investment grade government bonds). Expected Return Estimates: Using statistical methods, UBS estimates long-term average risk/return figures for all major asset classes and their behaviour in given model portfolios. Investors should note that these figures are derived from estimated long-term asset class performances and do not account for the content of individual portfolios nor of the performance of individual securities or active management. Active management may result in higher or lower future performance. Unless stated, transaction costs and portfolio fees are not included and these will reduce future performance accordingly. They indicate the statistically most likely performance from a range of possible outcomes and investors should not base their investment decision solely on the estimates above. Estimated annual performance and annual risk are not reliable indicators of future performance and future risk. Estimates are based on our current assessment of financial markets and are therefore subject to change. Short-term performance can deviate substantially from these estimates. GBP Bonds: Sterling denominated bonds rated AA+ or better with maturities of up to 10 years. 28
  30. 30. Glossary of terms (2 of 2) Hedge Funds: are collective investment vehicles which are active in the global capital markets, seeking to achieve absolute returns and capital appreciation. Hedge funds use a variety of investment techniques, are lightly regulated and often accept only a very limited number of investors so as to ensure that their investment strategy remains flexible. High Yield Bond: Bond which is rated BB+ or below by the leading rating agencies, or is of comparable quality. Because of their inferior credit quality, high-yield bonds offer a higher return than papers with a better credit rating, but also involve higher risks. The chief issuers of high-yield bonds are companies and emerging markets. Modelling Process for the Expected Return Estimates: Expected Returns are based on UBS Capital Market Assumptions ("CMAs") (methodology used to calculate Annualised Return) for each underlying asset class. UBS CMA's Return Estimates add together two elements: 1) the "Risk-Free rate" (per reference currency) which is equivalent to the Money Market rates and 2) the "Risk Premium" which is the additional return expected for the risk taken by allowing investment of your funds into particular asset classes. UBS periodically update the CMAs. The "Risk Free" rates (Money Market rates) will be updated monthly to adapt to Money Market rates changes and the "Risk Premium" will be reviewed annually or after major market adjustments. Model Performance: is based on the model ("template underlying the portfolios in the respective strategy"). Model Portfolios reflect investments in investments instruments which are subsequently implemented in client portfolios. Performance figures, however, do not include transaction costs and mandate fees and are therefore not directly comparable with mandate performance. Model portfolio performance reflects changes in the model (buy, sell, increase, reduce investment instruments) from the first trading day following the day of the change decision. Open-ended investment company (OEIC): is a body corporate which owns and manages investments (of various types) in order to give its members the benefit of spreading investment risk and the benefit of the management of the funds by or on behalf of the company. Quantitative Investment Solutions (QIS): is a portfolio analysis and simulation tool. It provides extensive top-down risk and historic performance analysis of a portfolio and, using Monte Carlo simulation techniques, calculates statistical estimates for the future projected growth of portfolio wealth. Potential Upside/ Downside: calculated by taking the weighted average return per annum for the portfolio, based on UBS forecasts for each underlying asset class index. This is then added or subtracted to/ from the portfolio volatility with 95% confidence (this is equivalent to 1.96 x Annualised Volatility) to determine potential upside or downside respectively. For example, for a portfolio with 5% expected return and 10% volatility, the potential upside is 5% + (1.96x 10%) = 24.6% and the potential downside is 5% + (1.96x -10%) = -14.6%. Risk: exposure to damage or financial loss, e.g. a fall in the price of a security, or insolvency on the part of a creditor. Financial market theory measures the risk of an investment or portfolio by the degree of expected return fluctuations. Unitised: Refers to a portfolio delivered within an Open Ended Investment Company (OEIC) or fund. For any further explanations that you may require, please refer to our UBS Dictionary of Banking at www.ubs.com/glossary or to your UBS client advisor 29
  31. 31. Disclaimer This document is issued by UBS Wealth Management, a division of UBS AG which is authorised and regulated by the Financial Market Supervisory Authority in Switzerland. In the United Kingdom, UBS AG is authorised by the Prudential Regulation Authority and is subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority. Details about the extent of our regulation by the Prudential Regulation Authority are available from us on request. Where products or services are provided from outside the UK, they will not be covered by the UK regulatory regime or the Financial Services Compensation Scheme. UBS AG, Jersey Branch is authorised and regulated by the Jersey Financial Services Commission for the conduct of banking, funds and investment business. Where services are provided from outside Jersey, they will not be covered by the Jersey regulatory regime. UBS AG, Jersey Branch and UBS AG, London Branch (which is registered as a branch in England and Wales Branch No. BR004507) are both branches of UBS AG a public company limited by shares, incorporated in Switzerland whose registered offices are at Aeschenvorstadt 1, CH-4051 Basel and Bahnhofstrasse 45, CH 8001 Zurich. UBS AG, Jersey Branch's principal place business is P.O. Box 350, 24 Union Street, St Helier, Jersey JE4 8UJ. This presentation has been prepared solely for information purposes and is based upon opinions which reflect our current views but which may be liable to change, and upon sources believed to be reliable. It is for your information only and is not intended as a recommendation, an offer, or a solicitation of an offer, to buy or sell any investment or other specific product. Although all information and opinions expressed in this document were obtained from sources believed to be reliable and in good faith, no representation or warranty, express or implied, is made as to its accuracy or completeness. All information and opinions as well as any prices indicated are subject to change without notice and the asset classes, the asset allocation and the investment instruments are only indicative. In accordance with the Financial Conduct Authority requirements, we should point out that with regard to any investments mentioned, values may fall as well as rise and you may not get back the original amount invested. It should be noted that past performance is not a reliable indication of future returns. At any time UBS AG ("UBS") and other companies in the UBS group (or employees thereof) may have a long or short position, or deal as principal or agent, in relevant securities or provide advisory or other services to the issuer of relevant securities or to a company connected with an issuer. Some investments may not be readily realisable since the market in the securities is illiquid and therefore valuing the investment and identifying the risk to which you are exposed may be difficult to quantify. Futures and options trading as well as alternative investments are considered risky. Some investments may be subject to sudden and large falls in value and on realisation you may receive back less than you invested or may be required to pay more. Changes in FX rates may have an adverse effect on the price, value or income of an investment. Furthermore, performance information may be based on simulations and/or be for illustration only. We would recommend that you take financial and/or legal advice as to the implications of investing in any of the products mentioned herein, including tax matters. Alternative investment funds are unregulated collective investment schemes under the UK regulations. As such, they have their own specific risks. They may only be proposed to private clients for whom they are suitable. When investing in the TM UBS (UK) fund range clients are purchasing the discretionary portfolio management service of UBS WM UK. The discretionary service is available in both a fund structure and a segregated portfolio format. The TM UBS (UK) fund range is an Open-Ended Investment Company (OEIC). In respect of the TM UBS (UK) fund range, UBS Wealth Management is acting as the Investment Manager and Thesis Unit Trust Management Limited is acting as the Authorised Corporate Director (ACD). The ACD is the corporate body and authorised person given powers and duties under FCA regulations to operate an OEIC. UBS Wealth Management and Thesis Unit Trust Management Limited are authorised and regulated by the Financial Conduct Authority (FCA). UBS does not provide tax advice. This document may not be reproduced or copies circulated without prior authority of UBS. This document is not intended for distribution into the US and / or to US persons or in jurisdictions where its distribution by us would be restricted. © UBS 2014. The key symbol and UBS are registered and/or unregistered trademarks of UBS. All rights reserved. 30

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