Multi-asset innovation

UBS has brought together two great minds to build a singular strategy.

Roger Ibbotson and Jim Rogers share a legacy of innovation and a common- sense market outlook. Each of these market pioneers has a distinct perspective and unique approach that complements the other.

    Index overview

    Multi-asset indexing strategies can provide individuals in and near retirement with ways to address some of their key concerns, including managing short-term market volatility, capturing harder-to-find excess return, and keeping ahead of inflation.

    By combining two specialized strategies, the UBS Market Pioneers Index ("the Index") seeks to address these concerns. The underlying strategies consist of two complementary component indices, one that invests in equities, the other in commodity futures. In addition, the Index includes exposure to fixed-income when the Index’s equity and commodity volatility targets are exceeded.

    The UBS Market Pioneers Index is a "long only" strategy with a total return objective, and it seeks to provide above-average returns with lower volatility over the long term.

    Equity component

    The NYSE Zebra Edge US Equity Index is an equal-weight, large-cap stock index. It is based on award-winning research by Roger Ibbotson, founder of Zebra Capital Management*. His premise is simple: don't chase hot stocks – boring is better.

    Popular stocks are stocks with high turnover—names that are experiencing their "15 minutes of fame." Analyzing decades of market data1, Ibbotson found that:

    • More popular names historically have higher valuations relative to their fundamentals, but lower expected returns
    • Less popular names have performed better and provided more stable price returns over time
    • Investment strategies have benefitted from systematically removing popular and overly volatile stocks from their portfolios

    Commodity component

    Unlike many other commodities strategies, which may focus on production or supply, Jim Rogers looks at global consumption patterns.

    Why focus on consumption? In simple economic terms, when supply goes up, prices go down if demand remains constant. If demand increases, then prices will go up when supply is constant or falling. This approach is primed to take advantage of dramatic increases in global consumption, especially within fast-growing emerging economies.

    A three part index construction methodology:

    • Global: Broad-based exposure to both developed and developing economies
    • Diversified: A basket of 27 commodities consumed in the global economy across livestock, agriculture, energy and metals
    • Transparent and liquid: The value of using rolling exchange-traded futures contracts on physical commodities

    Fixed-income component

    Fixed-income exposure is implemented using a tactical trend-following US 10-Year Treasury Futures Strategy.

    Selected risk considerations

    • The Index is not guaranteed to succeed at meeting its objectives.
    • The Index has exposure to equities, commodities and fixed income markets.
    • Financial products linked to the Index will be exposed to the risks of those products.
    • Relative strength and trend-following strategies could underperform in a choppy or range bound market.
    • The Index relies on risk control methodology, and could underperform indices that do not have a risk control overlay.
    • Changes in allocations between equities, commodities and US 10-Year Treasury Futures are based on rolling historical market data.
    • The Index is an excess return index and will not earn any cash re-investment return.
    • The Index has a limited operating history and may perform in unanticipated ways.
    • Backtested performance and backtested allocations of the Index should not be taken as an indication of the future performance of, or future allocations of, the Index.
    • Index performance is reduced by a 0.75% per annum index fee.
    • Exposure to equities market risk.
    • Applying a volatility and popularity filter may cause the index to underperform other indexing strategies.
    • Equal weighting of the equity index components may underperform indices that use other weighting methodologies.
    • Excess return indices will underperform if 3-month Libor rates experience a significant and consistent increase.
    • The NYSE Zebra Edge U.S. Equity Index fully reinvests dividends, but performance is reduced by an annualized ICE 3-month Libor rate.
    • The Jim Rogers Global Consumer Commodities Index weights commodities based on global consumption patterns. In certain market environments, a consumption weighted index may underperform indices that utilize other component weighting methodologies.
    • The Jim Rogers Global Consumer Commodities Index tracks commodity futures with further dated maturities. This enhanced roll methodology may cause the index to underperform indices or strategies that are composed of commodity futures with shorter-dated maturities.
    • Commodity indexes may lose value for the following reasons:
      • The effects of weather.
      • The impact of government programs and policies.
      • National and international political, military, or economic events.
      • Increases in interest and exchange rates and other factors that may affect the supply of and demand for global commodities.
    • Strategies linked to commodity indices composed of futures contracts, such as the Jim Rogers Global Consumer Commodities Index, may be impacted by the following:
      • Storage costs
      • Interest rates
      • Seasonality
      • Cost to roll futures
    • Subject to interest rate risk.
    • May be impacted by cost to roll futures.
    • The index is an excess return index and does not include exposure to an interest-bearing cash account.

    UBS Market Pioneers

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