Understanding risk and getting a good balance between asset classes will be important messages put f...
Understanding risk and getting a good balance between asset classes will be important messages put forward by UBS as it launches more retail products through the intermediary channel starting in the first quarter next year.
Graham Kane, head of retail at UBS Global Asset Management says investors would hopefully have learned to avoid putting all their eggs in the equities basket and will be more keen use the risk assessment model developed by UBS.
The model relies on analysts being remunerated according to how well investments based on their advice do, and on the use of sophisticated proprietary software.
UBS launched itself into the UK retail market in July through its Global Optimal Fund (GOF) and is likely to start marketing a smaller companies fund by the first quarter next year, and other products beyond that.
A key characteristic of GOF is a top-down approach looking at stocks in relation to industry sectors rather than by country.
Fund manager Wilson Phillips says global equities are still more risky than domestic funds because of issues such as protectionism and currency values.
However, all investor needs to think about diversification, particularly given some of the statistics involving the UK's biggest firms.
Companies such as Vodafone, BP, GlaxoSmithKline and HSBC make 80% of their sales outside the UK, while the average company in the MSCI world index - against which GOF is benchmarked - makes 35% of sales outside its domestic market.
Going international offers the opportunity to invest in companies as big or as profitable as UK peers, but at a considerable discount, potentially resulting in superior returns, he says.
A considerable amount of the ability to discover investment opportunities rests with GOF's use of UBS' own risk analysis platform, which consists of analysts around the world and some sophisticated software developed in-house.
Share prices are obviously important as there is no point in buying already fairly valued stocks; the idea is to find stocks undervalued compared to their global peers.
With that in mind, Phillips says that GOF has gone overweight on US pharmaceutical stocks, which are currently being battered over poor product launches.
It is underweight in technology, mainly because he believes the hardware rally has gone as far as possible at present, although GOF is interested in software where demand remains high.
Geographically the fund is overweight in Europe ex-UK because of valuations of shares in markets such as Sweden and the Netherlands, but not in Germany, where cross-holdings between firms remains a barrier to the local market breaking free from its current downturn.
Phillips will not be drawn on predictions for 2003, but says UBS' three-year view is that investors should be loading up their exposure to equities ahead of what is expected to be a recovery in corporate earnings against analyst expectations.
GOF is ranked 9 out of 145 funds in its sector between July and the end of November 2002 according to S&P's Micropal, and Phillips says his goal next year is to remain in the top quartile.
Develop ‘soft skills’
Governance reforms expected in May
Strategic partnership between firms
Catching up with the Influencers