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UBS Equity Funds Monthly update

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

July was a very good month for equities, as all major markets posted positive returns. The MSCI World gained 4.3% in USD terms, and the other leading indices were in clearly positive territory as well. S&P 500: +3.6%, Euro Stoxx 50: +4.4%, Nikkei 225: +6.4%, DAX: +6.8%, FTSE 100: +3.4%, MSCI Emerging Markets in USD terms: +5.0%.

As far as the sectors are concerned, biotechnology (+8.9%), IT (+8.1%) and materials (+6.4%) posted he best returns, while energy was the only major sector with negative performance.

List of funds

 

July

YTD

2015

Since launch on 06.05.2011

Performance (net of fees)

2.0%

+0.1%

+6.5%

+52.8%

  • The portfolio benefited mostly from holdings in industrial goods and banks whilst positions in insurance and health care detracted from overall performance.
  • Holdings in ABB, UBS and Nestlé added most to performance whilst weakness in Roche, Zurich and SGS impacted the performance negatively.
  • We increased our exposure to the real estate sector adding a new holding – otherwise no major transactions occurred during the month.

 

July

YTD

2015

Since launch on 09.12.2014

Performance (net of fees)

+2.1%

+0.7%

+5.7%

+6.1%

  • The portfolio benefited mostly from holdings in industrial goods and banks whilst positions in insurance and health care detracted from overall performance.
  • Holdings in ABB, UBS and Nestlé added most to performance whilst weakness in Roche, Zurich and SGS impacted the performance negatively.
  • We increased our exposure to the real estate sector adding a new holding – otherwise no major transactions occurred during the month.

 

July

YTD

2015

Since launch on 10.12.2010

Performance (net of fees)

+2.5%

-6.7%

+10.0%

+35.6%

  • The fund's substantial allocation to the UK and Spanish equity markets as well as its exposure to consumer discretionary and information technology added value, as did its exposure towards stocks with high dividend yield. On the other hand, the fund's currency exposure to the pound sterling contributed negatively to the absolute performance due to the depreciation of the GBP against the EUR in July. Furthermore, the fund's exposure to low volatility was a drag on performance. Its allocation to the Swiss equity market as well as its exposure to telecommunication services, energy, and financials detracted from performance.
  • At the stock level, the fund profited from holding Kering and Persimmon, but suffered from its stakes in Tenaris and Orange.
  • The fund is exposed towards high dividend and high-quality names. A continuation 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.

 

July

YTD

2015

Since launch on 28.01.2015

Performance (net of fees)

+3.1%

-2.3%

n.a.

-1.7%

  • The fund's substantial allocation to the Spanish equity market as well as its exposure to consumer discretionary added value. Furthermore, its exposure towards stocks with high dividend yield, small caps and companies with low growth characteristics also supported performance. On the other hand, the contribution from call-overwriting was a drag on absolute performance. The fund's allocation to the Belgian equity market as well as its exposure to telecommunication services, consumer staples, and energy also detracted from performance.
  • At the stock level, the fund profited from holding Hermes and Danone, but suffered from its stakes in Koninklijke KPN and Orange.
  • The fund is exposed towards high dividend and high-quality names. A continuation 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.

 

July

YTD

2015

Since launch on 14.06.2012

Performance (net of fees)

+0.3%

-8.3%

+23.2

+87.3%

  • Equity markets were positive, making up some of the negative performance seen in June. We saw a return to risk seeking behavior with cyclical sectors outperforming, fuelled by high expectations on central bank action and investor's search for returns. The energy sector was negative as oil prices were subdued during the month.
  • The fund underperformed, as the return to risk seeking behavior negatively impacted fund positioning during the month. Strong within the financials, notably banks, and the industrials and materials sectors impacted short positions and longs in consumer staples detracted despite little in the way of negative news flow.
  • Positioning remained broadly unchanged, favoring the health care, financials and consumer staples sectors and less exposure to industrials and materials. Within the financials sector the strategy sold a German real estate company following strong contribution to performance and bought back a Spanish financials short. We entered a new positioning in a global materials company.

 

July

YTD

2015

Since launch on 24.09.2015

Performance (net of fees)

+0.1%

-2.6%

n.a.

+2.6%

  • Equity markets were positive, making up some of the negative performance seen in June. We saw a return to risk seeking behavior with cyclical sectors outperforming, fuelled by high expectations on central bank action and investor's search for returns. The energy sector was negative as oil prices were subdued during the month.
  • The fund underperformed as the return to risk seeking behavior negatively impacted fund positioning during the month. Strong rallies within the financials, notably banks, and the industrials and materials sectors impacted short positions and longs in consumer staples detracted despite little in the way of negative news flow.
  • Strategy positioning remained broadly unchanged, favoring the health care, consumer staples and the financials sectors and less exposure to industrials and materials. We bought back some energy shorts following good contribution and opened a new long positioning in an oil and gas company.

 

July

YTD

2015

Since launch on 15.04.2011

Performance (net of fees)

+3.1%

+7.0%

+0.5%

+49.5%

  • The fund's allocation to Brazilian and Australian equities as well as its exposure to information technology, consumer discretionary and health care added value, as did its exposure towards stocks with high dividend yield. On the other hand, the fund's currency hedging contributed negatively to the absolute performance due to the depreciation of the USD in July. Furthermore, the fund's exposure to low-beta names was a drag on performance. Its allocation to the Chinese equity market as well as its exposure to energy, financials, and consumer staples also detracted from performance.
  • At the stock level, the fund profited from holding Linear Technology Corp. and Qualcomm, but suffered from its stakes in Orange and ConocoPhillips.
  • The fund is exposed to high dividend high-quality stocks. A continuation of increased risk appetite should favor equities in general, but defensive names less so than companies which are more exposed to the economic cycle.

 

July

YTD

2015

Since launch on 25.02.2014

Performance (net of fees)

+1.7%

+6.8%

-0.1%

+14.7%

  • The fund's allocation to the Australian equity market as well as its exposure to information technology, health care and consumer discretionary added value, as did its exposure towards stocks with high dividend yield. On the other hand, the fund's currency hedging contributed negatively to the absolute performance due to the depreciation of the USD in July. Furthermore, the contribution from call-overwriting was a drag on absolute performance, as was the fund's exposure to low-beta names. Its allocation to the Chinese equity market as well as its exposure to consumer staples, financials, and energy also detracted from performance.
  • At the stock level, the fund profited from holding Garmin and HCP, but suffered from its stakes in Exxon Mobil and Coca Cola.
  • The fund is exposed to high dividend high-quality stocks. A continuation of increased risk appetite should favor equities in general, but defensive names less so than companies which are more exposed to the economic cycle.

 

July

YTD

2015

Since launch on 31.05.2011

Performance (net of fees)

+6.9%

+13.6%

-23.4%

-19.9%

  • Emerging markets equities were up, buoyed by expectation of increased stimulus from global central banks. The Brazilian market led the rally as sentiment continues to improve, followed by South Africa benefiting from a stronger Rand. In Asia, ASEAN markets incl. Thailand and Indonesia posting strong gains. India was also strong amid portfolio inflows.
  • Our holdings in financials added the most to the performance of the fund driven by the good performance of China Vanke, South African bank Firstrand and Brazilian bank Itausa. Similarly, our holdings in IT performed well including Largan Precision.
  • Over the month, we made no changes to the strategy of the fund.

 

July

YTD

2015

Since launch on 05.01.2010

Performance (net of fees)

+6.4%

+9.3%

-6.5%

+4.7%

  • Emerging markets equities were up, buoyed by expectation of increased stimulus from global central banks. The Brazilian market led the rally as sentiment continues to improve, followed by South Africa benefiting from a stronger Rand. In Asia, ASEAN markets incl. Thailand and Indonesia posting strong gains. India was also strong amid portfolio inflows.
  • Our holdings in IT added the most to the performance of the fund driven by the good performance of Largan Precision and Samsung Electronics. Similarly, our holdings in financials performed well including Brazilian bank Bradesco amid improved sentiment.
  • We reduced our exposure to Indian financials and added to Indonesian financials reflecting the improving bottom-up fundamentals and macro picture in Indonesia. Similarly, we reduced our exposure to Indian healthcare and added to Chinese consumer discretionary.

 

July

YTD

2015

Since launch on 15.02.2013

Performance (net of fees)

+3.2%

-4.9%

+16.0%

+37.2%

  • The Chinese equity market (MSCI China) rose 3.5% in July. Consumer discretionary was the best performing sector over the month.
  • Our financials holdings added most value to the portfolio, with the insurance stocks recovering some YTD losses. Meanwhile, consumer staples positions hurt performance.
  • At the stock level, core positions such as Ping An Insurance and Tencent Holdings were key contributors.

 

July

YTD

2015

Since launch on 15.02.2013

Performance (net of fees)

+3.7%

+3.9%

-3.8%

+44.9%

  • The best performing sectors for the month were IT, materials and health care, while energy, consumer staples and utilities were the worst performing sectors.
  • Fund performance was supported by holding Linear Technology and Garmin, while negatively impacted by holding Hartford Financial Services and Whole Foods Market.
  • 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.

 

July

YTD

2015

Since launch on 05.03.2015

Performance (net of fees)

+1.8%

+6.1%

n.a.

+11.4%

  • The best performing sectors for the month were IT, materials and health care, while energy, consumer staples and utilities were the worst performing sectors.
  • Fund performance was supported by holding Varian Medical System and Cintas, while negatively impacted by holding Mondelez International and Automatic Data Processing.
  • 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.

 

July

YTD

2015

Since launch on 28.01.2016

Performance (net of fees)

+4.2%

n.a.

n.a.

+17.3%

  • Global equity markets posted strong positive returns. Within the themes, oncology along with energy efficiency were the top performers, while water scarcity and agricultural yield were the lowest performing themes.
  • At the security level, Alnylam Pharmaceuticals from the oncology theme along with Valeo SA from the energy efficiency theme were top performers while Kroger Co from the obesity theme was a laggard.
  • 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.