At UBS, our scale and commitment to alternative investing means we can offer you the expertise of local and global professionals with a demonstrated track record in alternative investing. By combining the breadth and depth of our leading platform with alternatives manager selection capabilities, we offer access to unique opportunities and innovative solutions to help you achieve your long-term goals.
How alternative investing may benefit you
Complementing your existing portfolio with alternatives may benefit your long-term wealth strategy.
Expanded universe
Exposure to investment opportunities or assets not easily available on public markets and traditionally reserved for large institutions and endowments.
Attractive risk-adjusted returns
Potential to earn an excess return over public markets and/or improve the return generated per unit of risk.
Portfolio diversification
Reduce dependence on traditional market drivers and add new levers of return.
Downside protection
Mitigate portfolio volatility in uncertain market environments.
Alternative solutions for private wealth investors
How alternative investing works
Alternative investments offer a unique opportunity to diversify your portfolio beyond traditional assets like stocks, bonds, or cash. By including assets such as private equity, hedge funds, real estate, and private credit, you can potentially achieve higher returns and reduce risk. Alternative investments can perform independently of market sentiment, behave differently from conventional markets and provide a buffer against volatility in equities or bonds.
For those with a long-term strategy, and the capacity to manage complexity and lower liquidity, alternatives can be a valuable addition. Investors should, however, keep track of the risks inherent to alternative investments. These include illiquidity, longer lockup periods, leverage, concentration risks, and limited control and transparency of underlying holdings. While risks cannot be fully eliminated they can be partially mitigated through extensive due diligence, strict manager selection, and diversification across vintages, managers, strategies, and geographies.
Why choose UBS for alternative investing
Broad selection
Benefit from a comprehensive range of alternative investment solutions and strategies with our Unified Global Alternatives (UGA) group.
Exclusive access
Explore exclusive investment opportunities with some of the world’s leading alternative investment managers via our open architecture platform.
Tailored to your needs
Address your specific investment needs through our tailored solutions with single asset class or multi-alternatives approaches.
Care in our craft
Harness the power of our 30 years’ experience in alternative manager sourcing and benefit from robust due diligence and risk management.
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What are the risks of investing in private markets funds
What are the risks of investing in private markets funds
Investors in private market funds must consider the following risks. Many of these factors can actually work in investors' favor as long as expectations of investors and managers are set properly in advance.
- Illiquidity. When investing in a private markets fund, investors must be prepared to accept significant illiquidity. This illiquidity is what allows access to more inefficient markets. On the other hand, investors cannot expect to access their capital or receive distributions with any regularity. Their only potential option for liquidity is to try to sell their stakes in the secondary market, where there may be no bid at all, or they may have to sell at a significant discount to fair value, if the fund manager even permits.
- Uncertain cash flows. Amount and timing of the cash flow is at the manager‘s discretion. LPs need to fund a “capital call” within a certain time frame. Unpredictable cash flows apply to early stage capital calls as well as to distributions to investors at later stages
- Fees. Private markets fund managers charge both management fees (typically in the 1.5-2.0% range) and incentive fees (typically in the 15-20% range). These levels are high compared to traditional asset funds, but the incentive fee helps to align objectives as the manager only gets paid if the investor achieves attractive returns. Most funds specify a hurdle or preferred return below which the manager does not receive incentive pay.
- Lack of control: Investors in private market funds cede control over investment decisions, pace of investments and exits, strategic and operational matters, and other significant decisions to the third party fund manager. While this eliminates investors' ability to "vote with their feet" to express displeasure with the manager, ceding control gives the manager the necessary tools to seek outperformance for investors.
- Blind pool risk. Investors must make long-term commitments to private markets funds in advance, without knowing what the underlying investments will be. This is known as blind pool risk. This dynamic can be mitigated through familiarity with the general partner and its track record as well as proper due diligence.
- Limited disclosure. Disclosure on performance of underlying investments is periodic and can be more limited given that managers need time and flexibility to work with underlying companies and are focused on long-term value creation. Also, valuation of private assets involves subjectivity and assumptions, and as such may not necessarily be indicative of long-term performance or potential.
- Use of leverage. This is not a blanket risk. Certain private markets strategies such as buyout use significant leverage which poses potential default risk if the company encounters stress, but many PM strategies do not involve any leverage. Prudent leverage in the right situation has historically shown to help enhance returns without significant incremental risk.
