Global Asset Management

Investment capabilities and performance

	Annualized

Composite	1 year	3 years	5 years	10 years
Global Equity Composite vs. MSCI World Equity (Free) Index	-	-	+	+
Global Bond Composite vs. Citigroup World Government Bond Index	-	-	-	+
Global Securities Composite vs. Global Securities Markets Index	-	+	+	+
US Large Cap Select Growth Equity Composite vs. Russell 1000 Growth Index	+	+¹	+¹	N/A

(+) above benchmark; (-) under benchmark. All are after fees. A composite is an aggregation of one or more portfolios in a single group that is representative of a particular strategy, style, or objective. The composite is the asset-weighted average of the performance results of all the portfolios it holds.

1 Performance data for 3 and 5 years is for UBS AG, NY Branch Large Cap Select Growth Composite, which is managed in a substantially similar manner to the US Large Cap Select Growth Equity Composite.

During the quarter, global equity markets, led by Japan, rose. In sector terms, energy was the worst performer, while materials continued to make strong gains. Transportation and diversified financials were also among the best-performing industries.

The actively managed global equity composite was ahead of its benchmark for the quarter, largely a result of positive stock selection in healthcare. An underweight position in energy further helped performance. This was partially offset by exposure to the lagging telecoms sector, with a portfolio underweight to the Japanese market also detracting from performance.

The growth equity capability continued to generate solid returns. Specifically, the US Large Cap Select Growth Equity composite has significantly outperformed its benchmark on a three-month, one-year and longer-term basis, largely as a result of positive stock selection in the energy and new media industries.

Global fixed income markets in mature economies continued to display relatively low levels of volatility with yields, particularly on longer dated maturity bonds, being little changed over the quarter – even though the period was marked by significant shifts in monetary policy, uncertain electoral outcomes and soaring gold prices. Probably the main factor behind the composure of bond market investors was the consistency of the underlying economic outlook, with few signs of any upsurge in core inflation. UK gilts were the strongest performers as sentiment was buoyed by the prospect of further cuts in official rates. Relative value improved in the credit sectors of fixed income markets as these underperformed government bonds during fourth quarter.

Although many of our global fixed income portfolios posted total returns in line with their performance benchmarks in fourth quarter, our Global Bond Composite was slightly below its benchmark for the quarter.

Global balanced strategies finished above benchmarks during the quarter. Asset allocation decisions underweighting developed country fixed income and high yield bonds added value, as did US equity security selection within that component. Currency was a modest detractor. Longer-term returns against benchmarks remain positive.

Increasing demand for both existing and newly launched institutional and wholesale real estate products, coupled with the successful rights issue for a Swiss-based real estate fund, led to a strong increase in assets in fourth quarter. This increase was also underpinned by solid performance in global real estate security funds.

Alternative and quantitative investments strategies posted strong gains in the fourth quarter, driven by more favorable market conditions in November and December. Returns across single manager hedge fund strategies were positive, with fundamental and quantitative long/short trading and core multistrategy producing strong risk adjusted returns. On the multimanager side, the core broad-based funds generated positive returns.

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