Ubs Group Ag · SIX:UBSG
Ubs — Debt Investor Presentation (April 2013)
31 slides from Ubs's debt investor presentation, April 2013
Slide 1: No more boundaries to fixed income investing
FOR PROFESSIONAL INVESTORS CH Version ONLY No more boundaries to fixed income investing UBS Global Opportunities Unconstrained Bond Fund For marketing and information purposes by UBS April 2013
Slide 2: Table of contents
Table of contents Section 1 How to navigate challenging environments? 4 Section 2 This way! 9 Section 3 Solution: UBS Global Opportunities Unconstrained Bond Fund 13 Section 4 Additional information 22 1
Slide 3: Heightened uncertainty may impact fixed income investors
Heightened uncertainty may impact fixed income investors A low-interest-rate environment implies low future returns for traditional bond funds. An increase in bond yields typically goes hand in hand with falling bond prices. Uncertainty may cause more volatility across fixed income sectors, which ma
Slide 4: Traditional fixed income investors are constrained
Traditional fixed income investors are constrained Fixed income strategies very often are tied to a benchmark universe and thus have limited room to maneuver when the market environment changes. Release your bond portfolio from such constraints and let active portfolio management skills work for you
Slide 5: How to navigate challenging environments?
Section 1 How to navigate challenging environments? For explanations on financial wordings please refer to the glossary at www.ubs.com/glossary or contact your UBS client advisor for further information.
Slide 6: Current macroeconomic environment
Challenge Current macroeconomic environment Current market conditions Consequences • Treasury bond yields are at historical lows despite • Investors continue to move from government bonds an environment fraught with uncertainty about to other instruments offering higher yields, hence mounting fiscal
Slide 7: Rising interest rates may harm returns
Challenge Rising interest rates may harm returns In a simplified* example, let’s assume a Current If interest rates rise by 2% tomorrow 5% bond portfolio with 3.5% • a modified duration** of 5 1.5% and 0% • a yield to maturity of 1.5% p.a. … resulting in and see what happens if interest rates When i
Slide 8: How much downside risk do you tolerate?
Challenge How much downside risk do you tolerate? Remember the rising interest rate environment back in1994, when: • the US central bank Fed raised interest rates seven times within one year, from 3.0% in February 1994 to 6.0% in February 1995* • 10-year US Treasury Note yields increased by 1.9%, fr
Slide 9: Any category can be strong in one year, but weak in another
Challenge Any category can be strong in one year, but weak in another Annual total returns for selected fixed income asset classes* (1991-2012; ranked from best to worst performance) 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 High Hi
Slide 10: This way!
Section 2 This way! For explanations on financial wordings please refer to the glossary at www.ubs.com/glossary or contact your UBS client advisor for further information.
Slide 11: Take a more rewarding approach
Way out Take a more rewarding approach Current government bond yields are at historically low levels despite an environment fraught with uncertainty about mounting fiscal debt levels. Given the risks associated with these high debt levels, allocations to government bonds within a fixed income po
Slide 12: Break the habit
Way out Break the habit Bond portfolios are often managed using a “benchmark-oriented” approach, which means that they typically invest in the asset classes, markets and sectors in which their benchmarks invest. In a typical benchmark-oriented approach, a portfolio is constructed in a benchmark-
Slide 13: Be as responsive as possible
Way out Consideration Be as responsive as possible s An ideal fixed income solution would seek to generate return potential from multiple sources within the global fixed income universe regardless of benchmark constraints have the flexibility to adjust global interest rate, credit and currency e
Slide 14: Solution: UBS Global Opportunities Unconstrained Bond Fund
Section 3 Solution: UBS Global Opportunities Unconstrained Bond Fund For explanations on financial wordings please refer to the glossary at www.ubs.com/glossary or contact your UBS client advisor for further information.
Slide 15: First a few but important words about risk
First a few but important words about risk The fund is not a money market, stable net asset value, cash alternative, or a traditional long-only fixed income fund. The fund may have exposures to higher-risk strategies within the fixed income and currency markets, and it may take both long and short
Slide 16: You and UBS Global Opportunities Unconstrained Bond Fund
You and UBS Global Opportunities Unconstrained Bond Fund For investors who UBS Global Opportunities Unconstrained Bond Fund is the right match because it seek a way out of traditional fixed income investing given its high invests very flexibly across global fixed income dependence on favorable m
Slide 17: Well-directed investment philosophy and approach
Well-directed investment philosophy and approach Investment philosophy Investment approach striving to achieve an attractive return over the diversified allocation to three potential return sources: medium term under various market conditions • global interest rates (rising or falling interest r
Slide 18: Released from the constraints of traditional bond funds
Released from the constraints of traditional bond funds UBS Global Opportunities Unconstrained Bond Fund Typical traditional bond fund yes, representing e.g. the US or global Benchmark none bond market striving to achieve an attractive return over the medium term under Investment objective investing
Slide 19: Net exposure ranges
Net exposure ranges* Interest rates Overall portfolio duration -3 years +6 Investment grade bonds** -100% +100% Emerging market bonds -60% +40% Credit High-yield bonds -60% +40% Securitized bonds -15% +15% Convertible bonds 0 +10% Curren- cies Non-US currencies -30% +30% * indicative gross exposure
Slide 20: Indicative portfolio structure as at April 2013
Indicative portfolio structure as at 16 April 2013* UBS Global Opportunities Unconstrained Bond Fund Asset class Weight Contribution to Country (currency) Contribution to (%) duration (years) duration (years) Cash 10.40 -0.01 Japan (JPY) -1.41 Emerging market bonds -4.70 1.02 UK (GBP) 0.31 High-yiel
Slide 21: Key benefits
Key benefits UBS Global Opportunities Unconstrained Bond Fund offers you the following advantages: an unconstrained global fixed income solution, which strives to achieve an attractive return over the medium term under various market conditions via active long and short positions whilst carefully
Slide 22: Technical data
Technical data UBS Global Opportunities Unconstrained Bond Fund Fund name: UBS (Lux) Bond SICAV – Global Opportunities Unconstrained (USD) Fund type: SICAV, part I UCITS compliance: yes Fund domicile: Luxembourg Custodian: UBS (Luxembourg) S.A. Currency of account: USD Accounting year ends: 31 May (
Slide 23: Additional information
Section 4 Additional information For explanations on financial wordings please refer to the glossary at www.ubs.com/glossary or contact your UBS client advisor for further information.
Slide 24: Correlations of fixed income markets increased during credit crisis
Correlations of fixed income markets increased during credit crisis 1.0 0.8 0.6 0.4 0.2 0.0 -0.2 -0.4 -0.6 Dec- Apr- Aug- Dec- Apr- Aug- Dec- Apr- Aug- Dec- Apr- Aug- Dec- Apr- Aug- Dec- Apr- Aug- Dec- Apr- Aug- Dec- 05 06 06 06 07 07 07 08 08 08 09 09 09 10 10 10 11 11 11 12 12 12 S&P 500 Index vs
Slide 25: Understanding the fund's expected volatility
Understanding the fund’s expected volatility* Monthly rolling 5-year standard deviation* 22% 20% 18% 16% 14% 12% 10% 8% 4-8% 6% 4% 2% 0% Dec-82 Dec-85 Dec-88 Dec-91 Dec-94 Dec-97 Dec-00 Dec-03 Dec-06 Dec-09 Dec-12 S&P 500 Index Barclays U.S. Aggregate Bond Index BofA M errill Lynch High Yield M aste
Slide 26: Seeking to generate return potential from multiple sources
Seeking to generate return potential from multiple sources • seek highest risk-adjusted opportunities globally • diversify exposures across global interest rates, global credit and global currencies • diversify strategies across expected time horizons • identify and manage correlations and use cross
Slide 27: Dynamic risk budgeting
Dynamic risk budgeting Level US market Curve shape Trade logic Interest Non-US Volatility rates developed markets • expected risk and return Non-US emerging markets • time horizon • scenario / shock analysis Investment grade UBS Global Corporate bonds • liquidity High yield Opportunities Securitized
Slide 28: Using derivatives to enhance efficiency
Using derivatives to enhance efficiency Derivatives, such as options and futures, are used in the strategy, e.g. as a source of potential return to obtain exposure to certain markets to replace more traditional investments as a risk management tool (see illustration below) to improve portf
Slide 29: Committed investment team
Committed investment team Brian Fehrenbach, Managing Director, is the Co-Head of US Multi-Sector Fixed Income, where he is jointly responsible for managing the Core, Core Plus, Long Duration, and Unconstrained investment strategies. He is a member of the Fixed Income Investment Committee. Prior to a
Slide 30: Closely interlinked team extensively drawing on global resources
Closely interlinked team extensively drawing on global resources Anderson (AUS) Baenninger / Hitzlberger (EUR) Van Tassel (IG / Securitized) Dow (US) Sugawa (JPN) 25+ Research Analysts Zhao (Global) (US, EUR, UK, HK, AUS) Dolan (Securitized) UBS Global Opportunities Ellinger (US) Unconstrained Bond
Slide 31: Disclaimer
Disclaimer For marketing and information purposes by UBS. UBS funds under Luxembourg law. Representative in Switzerland for UBS funds established under foreign law: UBS Fund Management (Switzerland) AG, P.O. Box, CH-4002 Basel. Paying agent: UBS AG. Prospectuses, simplified prospectuses or Key inves