Tuesday, August 28, 2007

UBS Launch 130/30 fund for Private Clients

UBS has launched a new fund based on the investment concept incorporating a 130/30 strategy, again (for the second time in a week) UBS come up with a silly name, it is the "UBS (Lux) Key Selection Sicav - US Equities 130/30 B". We do love UBS dearly and would recommend them to anyone as their systems and professionalism is second to none, however, I may have to apply for the position of 'Fund Naming Manager' as their present employee seems a little burnt out.

The fund has the aim of extending the availability of 130/30 strategies from institutional to private investors, which is a significant step to providing more institutional strategies to the average investor. As we manage funds on account for a number of private investors this particular launch is pleasing for us.

The strategy is to first put 100% into an index like the S&P 500. Then sell short 30% in stocks expected to do worse than the market. Take the proceeds from the short sales to go long stocks likely to beat the index.

Up to now, UBS says, fund products with a 130/30 strategy have mostly been the preserve of institutional investors. The new fund offers private investors access to the strategy, which takes advantage of additional sources of out performance by taking on average long positions equivalent to 130 per cent of the fund's capital and short positions amounting to 30 per cent, giving the fund net long exposure of 100 per cent.

Because of its ability to take short positions on overvalued stocks, UBS says, the Key Selection US Equities 130/30 fund has more potential to outperform than long-only equity funds, while its volatility is not substantially higher than the market average.

The fund portfolio is broadly diversified in terms of both stocks and sectors and favours listed US large and mid-cap stocks. Its benchmark is the MSCI USA index, and is designed for private investors with a long-term investment horizon.

It is particularly interesting from the point of view of our personal managed accounts. We utilise structured PIPE-type transactions along with late stage Pre-IPO's and IPO's which is an aggressive strategy developed for aggressive investors, however, the availability of products such as these that allow private clients exposure to institutional type fund strategies are a welcome addition to our arsenal.

If you would like more information, please get in touch

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