Acting as an asset navigator

One of the features of the information age is the practically infinite amount of online financial data and news anyone can get. This has been of huge benefit to private clients – and they are now much more sophisticated, interested, and demanding. As their needs have grown, UBS has kept up by broadening the products and services available to high net worth clients who choose to let the firm manage their assets – commonly called “discretionary portfolios” in the industry.

The UBS Managed Investment Portfolio (MIP) and the UBS Choice Investment Portfolio (CHIP) are two good examples of the new type of discretionary solution on offer. Launched in July 2005, they draw on a wide range of investment skills. Clients who choose a MIP solution for their assets, for example, gain access to a broad range of asset classes – bonds, equities, money markets, alternative investments and real estate as well as institutional instruments from UBS and third-party providers. Together with their client advisor, they choose one of five investment strategies (each with a specific expected return target) and three reference currencies that most closely match their risk profile – an approach that gives clients both maximum flexibility and optimal diversification. After the portfolio has been set, the UBS advisor meets his client for regular performance reviews and keeps him fully updated about market developments. CHIP, run along similar lines, is designed for ultra high net worth clients, offering them access to the institutional investment capabilities in UBS’s global asset management business – such as the absolute return bond and global allocation capabilities.

Both solutions join a discretionary product range comprising the UBS Absolute Return, UBS Portfolio Management Classic (PM), and UBS Managed Fund Portfolio Classic (MFP) solutions, each offered in a wide variety of investment strategies and reference currencies.

PM and MFP, the two established mainstays of the discretionary product range, have also been polished up. PM gives the client a choice of six investment strategies and five reference currencies. Although it ensures a client’s investments are globally diversified, it also provides for a substantial bias towards a reference currency to mitigate the effects of foreign currency fluctuations. MFP, on the other hand, continues to focus on UBS and thirdparty investment funds and fund-like instruments, offering clients six investment strategies and four reference currencies.

Both programs reflect changing client demands – notably the evolution of alternative products into a mainstream asset class. Hedge funds, for example, were introduced into discretionary portfolios in 2003 and now comprise up to 15% of a typical mandate. The real estate offering has been recently expanded with the inclusion of a globally diversified, institutional quality real estate component available for discretionary portfolios.

All these new developments have essentially turned UBS into an asset navigator. UBS develops, packages, and distributes solutions geared to client needs and expectations. As a result, the internal teams producing and servicing the solutions now work much more closely with client advisors and sales managers – resulting in a positive circle of feedback that ensures products remain in step with what clients want.

Clients, in turn, are signalling their appreciation. Newer products, such as the UBS Absolute Return, which actively manages client assets with the objective of providing positive absolute returns while preserving capital by diversifying assets, have attracted significant amounts of net new money.

After the strong pace of innovation seen in the past few years, UBS is confident that it now has a broader product shelf than ever before. In the future, there will be new offerings in specialized market segments – although innovation will never become an end in itself. Products are integral components of the service a client advisor provides – but it is up to each to judge how they are best employed in growing a client’s portfolio. And, in the end, it is the consistency and quality of that judgement, multiplied thousands of times each day, which separates and distinguishes UBS from its wealth management peers.