Stock markets are at an all-time high, but many investors are still concerned about a potential downturn. At the same time, some investors also fear missing out on gains if markets continue to rise.1 So how do you navigate this dynamic environment and build a diversified portfolio that seeks to manage stock (or equity) exposure risk during market shifts?
UBS has introduced the UBS Systematic Allocation Portfolio (SAP) separately managed account strategy. Driven by input from a proprietary quantitative model —the UBS World Equity Market Model (WEMM)—SAP's strategy seeks to manage equity risk exposure when markets are trending down and increase exposure when markets are trending up—helping you to manage risk in equities while potentially allowing you to participate in gains.
It also seeks to evaluate equity risk as economic and market environments change over time. Some of the key features include:
- Larger stock and bond allocation changes (approximately 10%-40% swings vs. 1%-2% in many portfolios)
- Allocation changes that are heavily weighted to manage exposure during a downturn—i.e., the portfolio’s reduction in equities is twice as large as its increase
- By looking to de-risk significantly in negative risk environments, the portfolio may reduce the amount of drawdowns, allowing investors to stay fully invested through all market conditions.
To more fully understand the potential benefits, fees and investment risks of SAP, please read our whitepaper .