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UBS Dynamic Alpha Strategy

Objective

Seeks to earn a predefined return, either absolute or real, with lower volatility than traditional global balanced portfolios.

Benchmark

Dynamic Alpha Strategy is an absolute return-seeking portfolio, unconstrained by a benchmark.

Investment philosophy

  • Interaction of investors and financial markets can generate substantial and unsustainable discrepancies between certain securities' market prices and their intrinsic values.
  • Price to intrinsic value discrepancies create opportunities to add value through active portfolio management.
  • Conventional, benchmark-linked balanced portfolios assume that the valuation of an asset class is consistent with that of the underlying securities that comprise the asset class.
  • Additional sources of return can be found by decoupling market selection from security selection, through a short position in the asset class, market or currency, additional sources of return can be found.

Investment process

  • Seek price to intrinsic value discrepancies at asset class, country, sector and individual security levels.
  • Decouple market exposure (beta) from security exposure (alpha) through the use derivatives, primarily by establishing short positions in futures contracts of a market index or in a currency.
  • Risk management is a key element of the portfolio and is integrated into portfolio construction process at every level.

 

Multi-asset strategies are subject to all the investment risks associated with stocks and bonds. Stocks have shown greater growth potential than other types of securities, but they have also shown greater volatility and risk of loss. Bonds are subject to interest rate and credit risk. Strategies that invest in smaller cap stocks, high yield bonds and foreign or emerging market stocks and bonds are subject to greater volatility and potential loss of principal. There can be no assurance that any strategy will achieve its objective. Asset allocation and rebalancing can not ensure gains or prevent losses from occurring.