Investment products and advisory

A Socially Responsible Investments (SRI) team was established in Global Asset Management as early as 1996. Today, SRI teams operate in all business groups and regions, allowing UBS to produce original SRI research and to offer a broad range of SRI investment products.

UBS’s asset management business is rapidly expanding its offering in the area of SRI to respond to growing demand from a number of markets. The SRI offering is diversified, and includes products managed according to “best-in-class” practice and theme-based approaches. “Best-in-class” is an active equity management approach based on stock selection of companies that generate above average environmental, social and economic performance and offer significant growth potential. The theme-based approach focuses investment around particular issues and themes such as energy, water and demographics.

Additionally, the global asset management offering comprises customized client portfolios in the form of segregated mandates / institutional accounts based on “negative” screening, which is the exclusion or avoidance of certain stocks or sectors from the portfolio based on their perceived negative social or environmental impact by the client. UBS’s global platform and investment research enable the firm to offer such tailor made solutions to meet its client needs.

In the UK, the asset management business pursues an engagement approach and seeks to influence the corporate responsibility and corporate governance practices of the companies it invests in.

Global Wealth Management & Business Banking has decided to integrate SRI into the UBS Client Experience framework by adapting relevant client profiling tools, adding new proprietary and selected third-party products to its SRI offering, and enhancing internal platforms that provide information and sales documentation. These measures should help client advisors identify, understand and meet client demand for SRI products more effectively.

UBS also offers structured products that take into account environmental and social topics, and UBS’s open architecture also allows clients to invest in SRI products from third party providers.

Case studies

2008 – UBS Europe Carbon Optimized Index
The index is designed to track the DJ Stoxx 600, but with a 30 - 40% lower carbon footprint. It matches the Sector Weightings of the benchmark but achieves its main aim by over-weighting the lower-carbon companies and similarly under-weighting the companies with larger carbon footprints within each sector, based on data provided by environmental research organisation Trucost. Back testing of the index shows that positive relative returns would have been produced from 2006 onwards, with the added bonus of a 37% carbon footprint reduction.

2007- New Climate Change Fund launched in Japan
Global Asset Management launched a new Japan domiciled wholesale fund. The fund was distributed through Nikko Cordial Securities, the third largest broker dealer in Japan. The fund is a customized variation of the UBS (Lux) Global Innovators, which invests in global equities with a focus on climate change.

2007 – Integration into Client Experience Framework
SRI was integrated as a pilot into the Client Experience Framework in Switzerland. As the pilot was successful, contributing to the overall increase of SRI invested assets, this approach will be rolled out to the other regions.

2007 – UBS Climate Change Strategy Certificate
The UBS Climate Change Strategy Certificate, an actively managed basket of around 20-25 stocks, was launched in February 2007 from the cooperation of existing capabilities in the investment banking and asset management businesses. The certificate gives investors access to innovative companies that develop solutions to fight climate change. The investment areas are energy production (renewable energy and cleaner energy) and energy efficiency (in buildings, in transport and in industrial processes and products).

2005 – UBS (Lux) Equity Fund – Global Innovators
In July 2005, Global Asset Management repositioned the former UBS (Lux) Equity Fund - Future Energy as the UBS (Lux) Equity Fund – Global Innovators. This innovative fund focuses on the various challenges the world faces in the twenty-first century, including energy and water shortages, continuing environmental damage and the demographic changes taking place in many industrialised countries. The fund’s investment themes have been selected to correspond to these issues and comprise renewable energy, mobility, water and nutrition & healthcare. Investments are made in companies whose products and services make a contribution towards solving the key issues facing the world in the twenty-first century. Our SRI analysts select new, high-growth companies known as "innovators" which make a contribution towards sustainable development in accordance with the chosen investment themes.

2005 – UBS (Lux) Responsibility Fund – European Equity
In July 2005, Global Asset Management launched a new SRI fund, the UBS (Lux) Responsibility Fund - European Equity, and brought all SRI products under a unique fund umbrella called UBS Responsibility Funds. The new fund was launched in response to the results of two market surveys: In the first, a representative sample of private investors were interviewed. The results confirmed findings made in previous surveys, showing that while many investors express an awareness (35%) and an interest (25%) in SRI, few have actually taken the active step of buying these products. In the second, 70 institutional investors from various European countries as well as from the USA and Australia were surveyed. The responses showed that the market for SRI in this client segment is expected to grow moderately, and that 40% of the investors planned to increase their SRI investments in the next three years. In parallel to this launch, UBS is conducting an internal awareness campaign to increase the visibility of UBS's SRI fund offering with Wealth Management client advisors.

2004 – Engaging in SRI
In the UK, Global Asset Management considers some key SRI criteria when choosing investments for its clients. These criteria include the corporate environmental policy, management and reporting of the companies in which it might invest.

This approach to SRI is one of “focused engagement”: companies are not screened on SRI grounds alone, rather Global Asset Management UK takes the opportunity as an investor to influence companies’ policies and behavior. Global Asset Management has had several successes with individual companies but perhaps its largest engagement activity to date has been its involvement in the Carbon Disclosure Project. Through this, it collaborates with other institutional investors to write to the 500 largest quoted companies in the world asking for information concerning their greenhouse gas emissions. The project asks companies to identify the business implications of their exposure to climate-related risks and explain what they are doing to address these risks. In 2004, 45% of the 500 companies believed climate change represents a risk or an opportunity, with 65% of companies in high-impact sectors now measuring and reporting emissions.