In order to proceed, you must confirm that you are a qualified investor based in Switzerland.

UBS Hedge Funds Monthly update

For qualified investors only
Swiss edition
Data as of 31st August, 2016

In contrast to the turbulence experienced in August 2015, equity markets were much calmer during the same month this year. The vast majority of global equity markets posted positive returns, especially emerging markets that continued their recent upward trend and outpaced their developed market counterparts. Chinese markets led the way, boosted by strong monthly results from several large cap corporates. In credit markets, the search for higher yielding assets continued. The UK government bond market posted strong results, supported by series of monetary easing measures taken by the BoE in the wake of uncertainty following the Brexit referendum.

Hedge funds benefited from the risk-on environment and performance across strategies was broadly positive. In equity hedged, this month again managers' respective net exposures largely drove performance. The few strategies that were challenged this month included quantitative equity and systematic trading.

List of funds

 

August

YTD

2015

Since launch*

Performance (net of fees)

-1.1%

-13.5%

+19.9%

+3.7%

* Since inception of strategy (01.11.2010). Performance calculation for P share class: after calculating the estimated gross-of-fee (for the period from 31.12.2014 through 27.01.2015 performance of the P/legacy share class the fee rate of the new Q/P share class is calculated back into the P/legacy share class and the two time series are combined.

  •  We saw a continuation of strong risk on sentiment in equity markets which has resurged after a brief period of uncertainty in June. Rallies in more cyclical and leveraged names continued. The Bank of England introduced a raft of measures and attention remains on central banks, with hopes for further stimulus from the ECB.
  •  Detractors came from short positions in industries that saw continued rallies such as materials and industrials, rerating to historically high valuations despite little evidence to suggest a fundamental change to the environment. High weighting to the health care sector detracted with the more defensive sectors underperforming this month.
  •  The fund maintained positioning during the month, as we have seen little change regarding the market environment or stock level fundamentals. The strategy remains net long to health care and consumer staples and net short to industrials, consumer discretionary and materials. We continue to increase conviction in names where movements appear unjustified and not backed by fundamentals.

 

August

YTD

2015

Since launch on 02.06.2010

Performance (net of fees)

+0.1%

-2.3%

+0.1%

+9.5%

  • All strategies generated relatively flat returns for the period. Notable contributors to performance included an emerging markets macro fund and a global merger arbitrage manager. Detractors from performance included an Asia-focused fundamental equity hedged fund, a quantitative equity manager and a global systematic trading manager.
  • Risk assets produced a largely positive performance as the search for yield continued to push financial markets higher. In equity hedged, managers reported gains on the long side of the portfolio, while short portfolios produced some offsetting losses.
  • In relative value, notable gains were generated by a hostile deal situation in the healthcare sector, while equity, credit and long convertible bond strategies also proved beneficial to performance. However, these gains were offset by quantitative equity sustainable growth and company management components, as well as price and event-based signals in North America.

 

August

YTD

2015

Since launch on 31.03.2010

Performance (net of fees)

+0.9%

-1.3%

+1.0%

+21.5%

  • The positive return of the fund was driven by equity hedged. Equity hedged managers generally produced positive returns, as the search for yield continued to push financial markets higher. Gains were generally reported on the long side of portfolios, while short exposures were more mixed.
  • Notable performance was generated by investments in the technology, energy and consumer sectors, while broader exposures to Asia and the US/Canada were also additive. On the negative side, short positions in the technology, media and telecommunications sectors, as well as index hedges, incurred losses during the period.
  • Performance in relative value was led by merger arbitrage, via positions in the US and Swiss healthcare sectors, as well as from a UK consumer sector position. In cap structure/vol arb, positive returns were driven by convertible event and arbitrage strategies. Agency MBS was the sole detracting strategy, where the flattening of the US treasury curve versus the long-end of the swap curve negatively impacted one manager.

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.