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UBS Equity Funds Monthly update

For qualified investors only
Swiss edition
Data as of 30th September, 2016

In September, equity markets didn't follow a clear trend and the returns varied between the different market places. The MSCI World rose by 0.6% in USD terms and some other major markets posted positive returns as well. Nasdaq: +1.9%, FTSE 100: +1.7%, MSCI Emerging Markets in USD terms: +1.3%. Among the indizes with negative returns were the Dow Jones: -0.5%, Euro Stoxx 50: -0.7%, DAX -0.8%, Nikkei 225: -2.6% and the SPI: -0.4%.

From a sector perspective, energy (+2.6%) and IT (+2.3%) posted the best returns, while financials (-1.8%) and telecom services (-1.1%) were among the sectors with a clearly negative month.

List of funds

 

September

YTD

2015

Since launch on 06.05.2011

Performance (net of fees)

-0.3%

+2.3%

+6.5%

+56.1%

  • Positions in banks and chemicals detracted from overall performance, whilst holdings in industrial goods as well as personal & household goods contributed positively.
  • Weakness in UBS, Nestlé and Givaudan impacted the performance negatively, whilst Richemont, Cembra and ABB were positive contributors.
  • During the month, we topped up our positions in Roche and Novartis post underperformance, while we cut outperformers in the Small and Mid Cap space back to their initial weight.

 

September

YTD

2015

Since launch on 09.12.2014

Performance (net of fees)

+0.3%

+2.2%

+5.7%

+7.8%

  • Positions in banks and chemicals detracted from overall performance, whilst holdings in industrial goods as well as personal & household goods contributed positively. The option overlay added performance.
  • Weakness in UBS, Nestlé and Givaudan were a drag on performance, whilst Richemont, Cembra and ABB were positive contributors.
  • During the month, we topped up our positions in Roche and Novartis post underperformance, while we cut outperformers in the Small and Mid Cap space back to their initial weight.

 

September

YTD

2015

Since launch on 10.12.2010

Performance (net of fees)

-0.2%

-6.1%

+10.0%

+36.6%

  • The fund's substantial allocation to French and Finnish equities as well as its exposure to financials and consumer discretionary added value. Furthermore, its exposure towards expensively valued stocks also supported performance. On the other hand, the fund's currency exposure to GBP contributed negatively to the absolute performance due to the appreciation of the EUR. The fund's allocation to the Italian and German equity markets as well as its exposure to real estate detracted from performance. Moreover, the fund's exposure to low volatility companies was a drag on performance.
  • At the stock level, the fund profited from holding Wartsila and Amadeus IT Group, but suffered from its stakes in Hugo Boss and EasyJet.
  • The fund is exposed towards high dividend and high-quality names. A resurgence of increased risk appetite for European assets should favor equities in general, but defensive names less so than companies which are more exposed to the economic cycle.

 

September

YTD

2015

Since launch on 28.01.2015

Performance (net of fees)

+0.5%

-1.7%

n.a.

-1.1%

  • The fund's substantial allocation to the French equity market as well as its exposure to financials added value. Furthermore, its exposure towards small cap stocks also supported performance. The contribution from call-overwriting enhanced absolute returns. On the other hand, the fund's allocation to the Italian and German equity markets as well as its exposure to real estate detracted from performance. So did the fund's exposure to low volatility.
  • At the stock level, the fund profited from holding Amadeus IT Group and Ageas, but suffered from its stakes in Hugo Boss and Deutsche Börse.
  • The fund is exposed towards high dividend and high-quality names. A resurgence of increased risk appetite for European assets should favor equities in general, but defensive names less so than companies which are more exposed to the economic cycle.

 

September

YTD

2015

Since launch on 14.06.2012

Performance (net of fees)

-2.7%

-11.8%

+23.2%

+80.1%

  • Markets continued to exhibit disparity between sectors. Materials, IT and energy outperformed, as cyclicals continued to lead the market with the exception of the banking industry. Defensive sectors, notably health care, underperformed. Oil prices rallied at the end of the month with OPEC signalling a restriction in supply and central banks remained accommodative.
  • The fund benefitted earlier in the month with good positioning in the banking and insurance industries. However, we saw detractors from materials and industrials with YTD trends remaining, and towards the end of the month from energy, as more cyclical names rallied against positive oil prices.
  • We have continued to maintain fund positioning despite large intra market dispersion between sectors as we have seen little change to company or economic fundamentals. The strategy's main overweights are to health care and consumer staples with underweights to industrials and materials. Consumer discretionary exposure reduced, as we took profits in Pandora.

 

September

YTD

2015

Since launch on 24.09.2015

Performance (net of fees)

-0.8%

-4.9%

n.a.

+0.2%

  • Markets continued to exhibit disparity between sectors. Materials, IT and energy outperformed, as cyclicals continued to lead the market with the exception of the banking industry. Defensive sectors, notably health care, underperformed. Oil prices rallied at the end of the month with OPEC signalling a restriction in supply and central banks remained accommodative.
  • The fund benefitted earlier in the month with good positioning in the banking and insurance industries. However, we saw detractors from materials and industrials with YTD trends remaining, and towards the end of the month from energy, as more cyclical names rallied against positive oil prices.
  • We have continued to maintain fund positioning despite large intra market dispersion between sectors, as we have seen little change to company or economic fundamentals. The strategy's main overweights are to health care and consumer staples with underweights to industrials and materials. Financials exposure reduced as we sold an insurance company and opened a new banking short.

 

September

YTD

2015

Since launch on 15.04.2011

Performance (net of fees)

+0.2%

+7.7%

+0.5%

+50.5%

  • The fund's allocation to the Japanese and Hong Kong equity markets as well as its exposure to energy and health care added value. Furthermore, its exposure towards stocks with low growth characteristics supported performance. On the other hand, the fund's currency hedging contributed negatively to the absolute performance due to the depreciation of the USD. In addition, the fund's sizeable allocation to the US equity market, its exposure to financials as well as the exposure towards large cap stocks detracted from performance.
  • At the stock level, the fund profited from holding Qualcomm and Sun Hung Kai Properties, but suffered from its stakes in H&M and Fuji Heavy Industries.
  • The fund is exposed to high dividend high-quality stocks. A resurgence of increased risk appetite should favor equities in general, but defensive names less so than companies which are more exposed to the economic cycle.

 

September

YTD

2015

Since launch on 25.02.2014

Performance (net of fees)

+0.2%

+7.5%

-0.1%

+15.4%

  • The fund's allocation to Japanese equities as well as its exposure to health care added value. Furthermore, its exposure towards stocks with high momentum and low growth characteristics supported performance. The contribution from call-overwriting also enhanced absolute returns. On the contrary, the fund's currency hedging contributed negatively due to the depreciation of the USD. In addition, the fund's sizeable allocation to US equities, its exposure to financials as well as the exposure towards large cap stocks detracted from performance.
  • At the stock level, the fund profited from holding Takeda and BP, but suffered from its stakes in Paychex and Ford Motor.
  • The fund is exposed to high dividend high-quality stocks. A resurgence of increased risk appetite should favor equities in general, but defensive names less so than companies which are more exposed to the economic cycle.

 

September

YTD

2015

Since launch on 31.05.2011

Performance (net of fees)

+0.8%

+13.9%

-23.4%

-19.7%

  • Emerging markets equities rose last month in USD terms on the back of currency gains and better commodities prices. Markets in EMEA outperformed with South Africa and Russia being the best performing markets. Asia was led by Taiwan and China. By contrast, Mexico weighed on Latin America amid uncertainty around the US elections.
  • Our holdings in IT added the most to the performance, led by Quanta Precision, Largan Precision and Alibaba. However, some of this positive effect was offset by holdings in telecoms including DTAC and Pldt.
  • Over the month, we made no changes with regard to the holdings.

 

September

YTD

2015

Since launch on 05.01.2010

Performance (net of fees)

+1.2%

+15.1%

-6.5%

+10.3%

  • Emerging markets equities rose last month in USD terms on the back of currency gains and better commodities prices. Markets in EMEA outperformed with South Africa and Russia being the best performing markets. Asia was led by Taiwan and China. By contrast, Mexico weighed on Latin America amid uncertainty around the US elections.
  • Our holdings in IT added the most to the performance, led by Largan Precision and Alibaba. Similarly, our holdings in financials added to the fund's return driven by the good performance of Bank Central Asia and Sberbank.
  • Over the month, we made no changes with regard to the holdings.

 

September

YTD

2015

Since launch on 15.02.2013

Performance (net of fees)

+4.4%

+6.2%

+16.0%

+53.2%

  • The MSCI China Index gained 14% in the 3rd quarter on the back of broad-based improvement in economic activity, marking its strongest quarterly performance since the 2nd quarter 2009. IT and financials fared the best and contributed strongly to this result.
  • Fund performance benefited from our positions in consumer discretionary and IT. At the stock level, TAL Education, Alibaba Group and Tencent contributed to the absolute returns.
  • We added to Baidu as we believe that market is underestimating Baidu's long term potential, so the stock is trading at pretty low valuations. We think Baidu has a healthy core search business and we expect further growth from the burgeoning artificial intelligence industries.

 

September

YTD

2015

Since launch on 15.02.2013

Performance (net of fees)

-1.7%

+3.1%

-3.8%

+43.7%

  • Financials, real estate and consumer staples were the worst performing sectors, whilst energy, IT and utilities performed best.
  • Fund performance was negatively impacted by holding Tractor Supply Company and Panera Bread, whereas the contribution of holding Qualcomm and Apple was positive.
  • The fund is exposed to high quality companies that are returning a large percentage of their market cap to shareholders via dividends and/or share buybacks relative to peers. Periods of increasing risk appetite should favor equities in general, but quality companies less so than companies which are more exposed to the economic cycle.

 

September

YTD

2015

Since launch on 05.03.2015

Performance (net of fees)

-1.4%

+4.8%

n.a.

+10.0%

  • Financials, real estate and consumer staples were the worst performing sectors, whilst energy, IT and utilities performed best.
  • Fund performance was negatively impacted by holding Sysco and Tractor Supply Company, whereas the contribution of holding Accenture and Mastercard was positive.
  • The fund is exposed to high quality companies that are returning a large percentage of their market cap to shareholders via dividends and/or share buybacks relative to peers. Periods of increasing risk appetite should favor equities in general, but quality companies less so than companies which are more exposed to the economic cycle. Additionally, the fund's low beta and covered calls can be a drag on performance in up-markets.

 

September

YTD

2015

Since launch on 28.01.2016

Performance (net of fees)

+1.2%

n.a.

n.a.

+20.5%

  • Within the themes, oncology as well as automation and robotics were top performers, while emerging markets infrastructure was the lowest performing theme.
  • At the security level, strong performers include Lexicon Pharmaceuticals from the oncology theme and New Oriental Education from the educational services theme. Lexicon released positive phase III results for the company's diabetes type I in tandem1 trial, with better safety results than provided in phase II. New Oriental Education rose on strong year over year student and course utilization growth rates. Novo Nordisk from the obesity theme was the largest underperformer throughout the month, as the firm is experiencing top line pressure in the US across the diabetic and hemophillia lines and announced restructuring.
  • We maintained the largest exposures to the energy efficiency, retirement planning and obesity themes.

Past performance of investments is not necessarily an indicator of future results. The performance shown does not take account of any commissions and costs charged when subscribing to and redeeming units.