The company has five new investment strategies in the works for launch in the near future, UBS head of investment management for the UK, James Mulford told Portfolio Adviser.
One of these is an “endowment style” proposition launching later this year, which offers a “Harvard or Yale approach” to investing to capture the illiquidity premium for clients who are able to invest over a multi-generation investment horizon.
“A big focus for us as a firm is to move our alternatives offering up a gear to really establish ourselves as the wealth management market leaders in alternatives investing,” Mulford said. “We want to give clients something different they will not be able to find elsewhere, and to do that we will use our full buying power as part of UBS to get access others cannot.”
“The strategy will have up to 40% invested in hedge funds and other alternatives including private equity, private debt and real estate,” he continued. “The minimum portfolio size will be £5m, so it is not for everyone. Having up to 40% in alternatives will not be for everyone either, and investors will need to have an investment horizon of at least 15 years.”
UBS Wealth is a strong advocate of the diversification benefits hedge funds and other alternatives can bring.“We are recommending greater diversification to clients in view of the volatility we are seeing but being at the bottom of an interest rate cycle, it is much more challenging to achieve this through fixed income, so we recommend alternatives, and hedge funds in particular,” Mulford said.
“Hedge funds have two major benefits: they can be a greatway to mitigate against volatility and to profit from it. However, it is important to diversify across a range of hedge fund strategies if you want to get diversification away from equities.” Mulford said the firm’s strategic asset allocation has a 15% weighting to hedge funds at the moment and it was considering raising that to 20%.
UBS is also working on an offering that adds Ucits-compliant single-manager hedge funds into traditional equity and bond portfolios, with the plan again to launch later this year. Another recent significant development within the firm’s asset allocation was a move to bring equities down to neutral from overweight in January.
