UBS launch US Equity Alpha Fund

CHICAGO -- UBS Global Asset Management announced today that it has launched the UBS U.S. Equity Alpha Fund, a core equity holding that seeks to generate alpha -- or the excess return over the benchmark -- by investing in both long and short positions.

UBS Global Asset Management launched a similar strategy in the institutional market in September 2005; as of June 30, 2006, the group managed $411 million in assets in that strategy.

The UBS U.S. Equity Alpha Fund seeks to outperform the Russell 1000 Index by 250–500 basis points per year (gross of fees) over a full market cycle, with a similar level of market risk as the index. UBS Global Asset Management does not represent or guarantee that the fund will meet this return goal.*

The UBS U.S. Equity Alpha Fund attempts to generate alpha in three ways:

Taking long positions in securities deemed underpriced.

Taking short positions in securities deemed overpriced.

Making pair trades. A pair trade takes a long position in a somewhat undervalued security and a short position in a somewhat overvalued security that are correlated.

“The UBS U.S. Equity Alpha Fund is not a hedge fund, but a core equity strategy that fully employs UBS Global Asset Management’s 25-year, fundamental, price-to-intrinsic-value philosophy,” said John Leonard, Head of North American Equities at UBS Global Asset Management (Americas) and leader of the Fund’s investment management team.

“Although we have not traditionally employed short selling in our strategies, our investment process has proven successful at identifying both over- and underpriced securities. In long-only portfolios, we can capitalize only on a portion of our research convictions: the underpriced securities. By relaxing the long-only constraint, UBS U.S. Equity Alpha Fund has the flexibility to capitalize on all the mispriced securities our research identifies,” Leonard added. “This added capability offers retail investors the potential for returns that are higher than those offered by traditional long-only funds and the benchmark. Markets go in cycles, with growth outperforming value for a time and then value outpacing growth. UBS U.S. Equity Alpha Fund seeks to add value throughout a full market cycle, regardless of which style is in favor.”

UBS is one of the world’s leading financial firms, serving a discerning global client base. As an organization, it combines financial strength with an international culture that embraces change. As an integrated firm, UBS creates added value for clients by drawing on the combined resources and expertise of all of its businesses.

UBS is the world's largest wealth manager, a top-tier investment banking and securities firm, and one of the largest global asset managers. In Switzerland, UBS is the market leader in retail and commercial banking.

UBS is present in all major financial centers worldwide. It has offices in 50 countries, with about 39% of its employees working in the Americas, 37% in Switzerland, 16% in the rest of Europe and 8% in Asia Pacific. UBS's financial businesses employ around 72,000 people around the world. Its shares are listed on the SWX Swiss Stock Exchange, the New York Stock Exchange (NYSE) and the Tokyo Stock Exchange (TSE).

* Risk is measured by standard deviation. A market cycle is typically four to seven years.

Disclaimer

There are certain risks that may impede the achievement of the Fund’s goal, which include, but are not limited to, derivative risk, leverage risk and short selling risk. It is possible that the Fund’s securities held long will decline in value at the same time that the value of the securities sold short increases, thereby increasing the potential for loss. The Fund expects to have 100% exposure to the US equity markets, so when the markets experience negative returns, the Fund may experience negative returns.

Geneva banks expand on changing fortunes

Geneva's banking industry has notched up "significant growth" over the past two years, with employment in the sector climbing almost ten per cent. The canton's 140 banks now employ more than 18,000 staff, reflecting the increased demand for asset management as a result of a buoyant global economy and higher commodity prices.

"We are certainly benefiting from a positive environment within our traditional corresponding countries, whether in Europe, North or Latin America, the Middle East and the expansion in Asia. That generates new wealth and service opportunities for existing customers," Steve Bernard, director of the Geneva Financial Center, told swissinfo.

"You also have the oil factor for Middle East and east European customers, who have seen their wealth increase tremendously, and part of this is handled by Swiss-based banks."

Since January 2005 the number of people employed by the Geneva banking sector has risen from 16,300 to just over 18,000. Leading private banker Pictet & Cie, which employs 2,200 people worldwide, says it will have created 300 jobs by the end of the year – 60 per cent in Geneva. The bank is due to move into new headquarters in the city later this year and already needs additional office space, according to spokesman Frank Renggli.

The Geneva Financial Center estimates that the volume of assets under management in the city now stands at SFr1.5 trillion ($1.22 trillion). Swiss-based banking establishments currently manage around SFr4.5 trillion. Chantal Bourquin, spokeswoman for the Geneva Private Bankers Association, admitted that these were "good times" for the body's members. She said growth among members was not a new trend but acknowledged that this year may have outstripped previous ones.

Bernard said the vast amounts of money being placed in Geneva mirrored the revitalised fortunes of the Swiss banking sector as a whole, which was hit by the global slump post-September 11. In addition, the industry had to weather a period of uncertainty as the European Union sought to lift banking secrecy in an effort to clamp down on tax evasion.


Withholding tax

This was resolved by a deal that came into force in July last year which preserved banking secrecy in exchange for the levying of a tax on interest earned by EU residents with Swiss bank accounts.

"The difficulties we had with the EU when we were negotiating the bilateral agreements are behind us. There is no question mark at least for the next ten years and we see the pressure turning to other centres," Bernard said.

On Monday the EU announced it would be targeting financial centres in Asia, such as Singapore and Hong Kong, as part of new efforts to clamp down on tax evasion. Zurich is traditionally seen as Switzerland's banking centre but Bernard stressed that Geneva was not a junior partner but a complementary one, with a strong reputation in private banking and trade finance.

"Geneva is certainly a smaller financial centre than Zurich in terms of numbers of employees. But I believe it is roughly on a par when you talk about asset management and it's definitely ahead in terms of trade finance," he said.

swissinfo, Adam Beaumont in Geneva