UBS ETFIn order to proceed, you must confirm that you are an institutional investor based in Luxemburg.

1) Entities which are required to be authorised or regulated to operate in the financial markets:

    a) Credit institutions

    b) Investment firms

    c) Other authorised or regulated financial institutions

    d) Insurance companies

    e) Collective investment schemes and management companies of such schemes

    f) Pension funds and management companies of such funds

    g) Commodity and commodity derivatives dealers

    h) Other institutional investors

2) Large undertakings meeting two of the following size requirements on a company basis:

    a) balance sheet total: EUR 20 000 000

    b) net turnover: EUR 40 000 000

    c) own funds: EUR 2 000 000

3) National and regional governments, public bodies that manage public debt, Central Banks, international and supranational institutions such as the World Bank, the IMF, the ECB, the EIB and other similar international organisations.

4) Other institutional investors whose main activity is to invest in financial instruments.

  • Investments in these products should be made only after studying the current prospectus and Key Investor Information Document in detail.
  • The information was prepared without reference to any specific or future investment objective, financial or tax situation or requirement on the part of a particular individual or group.
  • The information is intended for information purposes only and constitutes neither an offer nor a solicitation to buy or sell securities of any kind or related financial instruments.
  • The products or securities described below may be unsuitable or prohibited for sale in all jurisdictions or to certain categories of investors.
  • The following information and opinions have been compiled or arrived at based upon information obtained from sources believed to be reliable and in good faith, but are not guaranteed as being accurate, nor are they a complete statement or summary of the securities, markets or developments referred to.
  • The following details and opinions are provided without any guarantee or warranty and are for the recipient's personal use and information purposes only.
  • UBS AG and/or other members of the UBS Group may have a position in and may make purchases and/or sales of any of the securities or other financial instruments mentioned below.
  • This and the following information may not be reproduced, redistributed or republished for any purpose without written permission from UBS AG.
  • Representative in Luxembourg for UBS Funds established under foreign law: UBS Fund Services (Luxembourg) S.A. Sales prospectuses, Key Investor Information Documents, articles of association and contractual terms as well as annual and semi-annual reports of UBS Funds are available free of charge from  UBS ETF Sicav, 49, Avenue J.F. Kennedy, L-1855, Kirchberg, Luxembourg
  • Units of the UBS Funds mentioned above may not be offered, sold or delivered in the US. The information mentioned herein is not intended to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments.
  • The following information and charts may contain information on performance. Past performance is not a reliable indicator of future results. The performance shown does not take account of any commissions and costs charged when subscribing to and redeeming units. Commissions and costs have a negative impact on performance.
  • If the currency of a financial product or financial service is different from your reference currency, the return may rise or fall as a result of currency fluctuations. This information pays no regard to the specific or future investment objectives, financial or tax situation or particular needs of any specific recipient.
  • The details and opinions contained on this website are provided without any guarantee or warranty and are for the recipient’s personal use and information purposes only.
  • This and the following information does not constitute tax, legal or investment advice. Please contact your tax, legal and/or investment advisor.
  • The following  information contain statements that constitute “forward-looking statements”, including, but not limited to, statements relating to our future business development. While these forward-looking statements represent our judgments and future expectations concerning the development of our business, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from our expectations.
  • Source for all data and charts (if not indicated otherwise): UBS Asset Management. © UBS 2022

Cyclical and defensive sectorsWell-positioned to take advantage of economic cycle


Companies with cyclical business models benefit in particular from economic upturns. But in an economic downturn defensive stocks are more stable. With the UBS ETF (IE) MSCI EMU Cyclical UCITS ETF and the UBS ETF (IE) MSCI EMU Defensive UCITS ETF, investors can gain an ideal positioning in any phase of an economic cycle. This enables them to benefit from the altered performance of various economic sectors in different business phases.

How do cyclical and defensive sectors work?

Companies and their business models react differently to economic trends.Some companies' profits see a sharp rise in an economic upturn, but experience an especially heavy drop when the economy falters. They are considered to be highly dependent on the economic cycle. The term "cyclical company" has been given to these kinds of companies.

Their counterparts are called defensive companies. These companiesgenerate relatively stable profits throughout all phases of the economic cycle, but see less of a benefit when the economy expands.Typical examples of cyclical companies range from furniture manufacturers to financial companies.

Utility providers and companies from the health care industry are examples of firms that are seen as particularly defensive. Figure 1 illustrates classification of the sectors, where contribution of each sector is assigned 20 percent to ensure an equal representation in the combined portfolio.

MSCI EMU Cyclical and Defensive Sector Indexes

Source: MSCI

Whether a company's business model is cyclical or not also has an impact on the performance of its shares. Historical data, for example, show that:

  • Cyclical sectors feature stronger share price fluctuations, meaning higher volatility, than the equity market as a whole.
  • Cyclical sectors also correlate more with the overall market, and therefore move more in unison with the market than defensive sectors. Cyclical sectors also feature a higher correlation among one another.
  • Phases of outperformance of defensive stocks have alternated with the outperformance of cyclical shares, at least until the financial crisis in 2008. Over the period of financial turmoil, defensive sectors have been considerably more robust. The differences in phases of greater stress, such as at the peak of the debt crisis in the Eurozone, were especially clear.
Comparison of cyclical and defensive sectors over time

Sources: MSCI, UBS Asset Management, as of December 2014. Past performance is no guarantee of future trends.

Taking these kinds of long-term patterns as a basis, the index provider MSCI developed the family of MSCI Cyclical & Defensive Indexes. UBS ETFs now put these indexes within the reach of investors wanting to get involved in the equity market of the Eurozone with two ETFs. With the UBS ETF (IE) MSCI EMU Cyclical UCITS ETF and the UBS ETF (IE) MSCI EMU Defensive UCITS ETF, investors have the option to make tactical use of the developments of sectors in a varying economic cycle.

The two ETFs benefit from the fact that the performance differences between cyclical and defensive sectors tend to return to their historical averages in the long run as in Figure 2. Investors are able to benefit from this pattern by rotating tactically between cyclical and defensive sectors – and back – at the optimal time linked to the economic cycle. 

The UBS ETF (IE) MSCI EMU Cyclical UCITS ETF reflects the performance of equities from five commercial sectors:

  • information technology
  • materials
  • financials
  • consumer discretionary goods
  • and industrials

Given that the ETF is based on the MSCI EMU Cyclical Sectors Capped Index, all sectors are weighted equally at the index adjustment dates taking place regularly, meaning each sector is given a weighting of 20 percent.

This helps to offset any possible imbalances resulting from over- or underrepresentation of any sector (e.g. overconcentration in financials or energy). The equal representation of sectors differentiates these investment strategies from the conventional approach, where sector weighting is done exclusively according to the market capitalization of the underlying companies, resulting in sector asymmetries.  

The ETF physically replicates its reference benchmark, meaning it invests directly in the equities included in the index. The total expense ratio (TER) comes out to 0.25 percent per year.

The UBS ETF (IE) MSCI EMU Defensive UCITS ETF reflects the performance of equities from five commercial industries:

  • consumer staples
  • energy
  • health care
  • telecommunication services
  • and utilities

The reference index is the MSCI EMU Defensive Sectors Capped Index. Similarly, the individual sectors are also given an equal weight of 20 percent each at the index adjustment dates.

The ETF physically replicates its reference benchmark, meaning it invests directly in the equities included in the index. The total expense ratio (TER) comes out to 0.25 percent per year.

Cyclical and Defensive Sectors ETFs in focus

Get to know us – we gladly assist you in finding the answers you need