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Rene Buehlmann, Head of Investment Products & Services, Hong Kong, talks to UBS Perspectives about investment funds, establishing a strategic ‘core satellite’ portfolio, and how, why and where he invests.
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UBS Perspectives: The investment fund industry in Asia has developed at an impressive pace in recent years. What are the benefits of investing
via funds?
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RB: Funds are the most efficient way
to gain access to a variety of investment themes, asset classes and managers with different skills across different regions. If you were to hold five to seven different funds in your core portfolio, you may actually own
up to 1,000 securities that are monitored and researched by experts daily. Your returns should be less volatile and your risk is diversified without losing flexibility.
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| UBS Perspectives: Do you personally invest in funds? |
RB: Absolutely! The majority of my ‘core portfolio’ is invested in funds and hedge funds. I do not have the time to monitor my global portfolio daily, so I appointed some of the best fund managers to do this for me. I complement my portfolio with selective single stocks and bonds of my preferred companies and add structured products when I see market opportunities.
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| UBS Perspectives: How would
you describe UBS’s investment
fund strategy? |
RB: At UBS, we apply a so-called ‘core satellite’ concept, which aims to achieve an investor’s strategic goals through a ‘core’ portfolio, whilst enabling the investor to take advantage of market opportunities – through ‘satellite’ investments. Our strong global-research platform enables us to identify the best fund mangers and investment opportunities.
To cater to our Asian home bias, we have dedicated local resources along the entire fund-value chain, including due diligence, operations, product development and distribution. In addition, we stay in constant dialogue with our clients about how they want to approach their investments. Many investment and hedge-fund strategies require solid specialist know-how, market expertise and many years of experience. We can offer all of these.
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| UBS Perspectives: What are the benefits to clients of using the ‘core satellite’ approach? |
RB: A ‘core satellite’ investment approach can help investors to see the big picture and align their strategic goals with their risk profile, while at the same time it facilitates the incorporation of individual preferences and opinions in their portfolios. Effectively, it establishes a well-diversified portfolio that is not overly affected by events impacting single companies or markets, and one that simultaneously allows leeway to embed personal choices.
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| UBS Perspectives: How does carrying out due diligence translate into better returns for clients? |
RB: Typical due-diligence at UBS helps to identify the factors that decide whether a strategy will be successful over the long term. This may include analysis of past track records, organizational set-up, decision processes, risk management, style bias, portfolio activity, size, people, and costs. It also involves an interview with the manager, and sometimes even a site visit. We maintain an open-architecture platform and select best-in-class investment funds, which, most importantly, we regularly monitor. This should translate into portfolios that perform consistently for our clients.
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| UBS Perspectives: What is the
role of hedge funds in the ‘core satellite’ concept? |
RB: Hedge funds have different
value-drivers when compared to traditional investments. These funds are less dependent on equity-market volatility or interest-rate fluctuations. Blending them with conventional equities and bond-fund portfolios can reduce volatility and optimize an investor’s risk/return profile. Subsequently, certain types of hedge funds can be considered as a core holding, whereas others, predominantly single managers, can be included as satellite investments.
We have recently enhanced our Hedge Fund product range, thereby leveraging the expertise of UBS’s Global Asset Management division, one of the world’s largest hedge fund managers. Together, we offer our Wealth Management clients access to global network and capabilities.
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For further information on how you can optimize your portfolio with UBS’s Investment Funds platform, please contact your
UBS Client Advisor. |
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