UBS Asset Management Canada
The goal of the Canada Plus Equity Fund is to deliver a higher rate of return than can be earned by investing in Canadian equities alone. The Canadian stock market represents only 3% of total world stock market capitalization, therefore, UBS (Canada) believes that participation in global markets will not only enhance investment returns but also reduce risk through global diversification. The Fund invests in high quality, highly-marketable stocks of Canadian, U.S. and non-North American companies, and is well diversified across global industry sectors. The normal allocation of the Fund is 70% Canadian equities and 30% global equities.
The manager's investment philosophy for the Fund is based on the premise that over time the real worth, or intrinsic value, of any security is defined by the present value of its future cash flow. Our research process seeks to define these future cash flows, our valuation model calculates the intrinsic value, and then we compare intrinsic value to market price. The Fund invests in securities of companies that the Manager believes are undervalued, based on fundamental research, internally developed valuation systems and seasoned investment judgment. The objective of the Fund is to outperform the benchmark, which is 73% of the S&P/TSX Composite Index plus 27% of the MSCI World Index, over moving four year periods.
Expected returns from equity markets over short periods of time are very unpredictable. Investment in U.S. and international equities provides additional diversification, thus lowering the risk level. Fund Returns will be largely influenced by the returns of the S&P/TSX Composite.
Since 1980, annual returns for the Canadian stock market have varied between -33 and +34 per cent.
The Fund is suited for investors with a long-term outlook (minimum 5 to 10 years). Historically, investors willing to accept the higher short-term risk in the stock market have been rewarded with higher long-term returns (compared to less risky investments).