Translating research into portfolio investment solutions

Andy Williamson, Head Investment Strategist and Head of Advisory Products APAC

UBS offers solutions to portfolio positioning and insights into financial trends. Recent research has identified several main themes, including:

Western winners from emerging-market growth UBS has identified a number of companies with an above average exposure to emerging regions that look set to benefit from the trend of growth gaps between the developed world and emerging regions.

US high-yield corporate bonds US companies are sitting on record-high cash balances while financing pressures have been alleviated. We believe US high-yield corporate credit offers to companies a very attractive risk-reward profile.

Macrodynamics supportive of Asian currencies Asia’s economic growth is solid and the region is an important driver of global growth. Asia should therefore attract healthy foreign direct investment and portfolio inflows.

There is often debate whether portfolio investing is an art or a science. Both are right to some extent, but the latter should arguably play the greater part in constructing your portfolio.

At UBS, we adopt a disciplined and robust approach to portfolio investing that begins with a thorough understanding of your objectives and risk tolerance. We match to your needs asset selections that are most suitable for you before sourcing investment ideas through detailed research and analysis.

Our Chief Investment Office (CIO) helps guide the construction of reference portfolios. Assets are allocated within these portfolios according to the expected returns and volatility of those underlying asset classes. By blending asset classes, we can create portfolio frameworks that offer given risk-and-reward characteristics, indicated by the backtesting of historical data. The ‘core’ component of your portfolio will be constructed by matching these asset allocations with your needs and objectives.

By applying the best of our in-house research and investment capabilities, represented by over 900 individuals from around the globe, our CIO research team will determine which asset classes offer the best risk-return payoff at any given time. This is where the ‘satellite’ concept comes in to play. We tactically position portfolios to take advantage of better performing assets and reduce exposure to areas where weaker performing assets are expected in the prevailing market environment.

In deciding how to populate these broader asset classes, our CIO research team offers strategic solutions that leverage the skills of our product specialists. Our research analysts will identify where the best opportunities exist across equity regions and sectors, fixed income, hedge funds, currencies and commodities. Our product specialists will source or create the most appropriate investment products that best express the research view.

In this way, we ensure that there is a research basis for all investment recommendations and that these investments complement either strategic (core) or tactical (satellite) components of a portfolio.

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