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UBS goes for US equities



Type: Oeic

Aim: Growth by investing in US equities

Minimum investment: Lump sum £1,000, monthly £50

Investment split: US large-cap companies 65%, US mid-cap companies 35%

Yield: None

Isa link: Yes

Pep transfers: Yes

Charges: Class A shares &#45 initial 4%, annual 1.5%, class B shares &#45 annual 0.9%

Commission: Initial up to 3%, renewal up to 0.5%

Tel: 0800 5872111

The panel: Miles Moseley, certified financial planner, Miles Moseley Financial Services, Alan Buswell, proprietor, Glenburn Financial Services, John Wright, proprietor, Investment management Services, Keith Lewis, principal, Hartley Greatbatch & Co

Suitability to market 6.3
Investment strategy 6.5
past performance 6.0
Company&#39s reputation 6.5
Charges 5.8
Commission 5.8
Product literature 6.5

UBS Asset Management&#39s US equity fund aims for capital growth by investing in between 80 and 90 UK stocks. Around 65 per cent of the portfolio goes into large caps and 35 per cent in invested in mid caps.

Looking at the fund&#39s market suitability Moseley says: “It is a widely invested US fund suitable for balanced investors as part of a global portfolio.” Buswell says: “There are lots of US equity funds so this one is simply one of many trying to attract investors back into the market.” Lewis thinks now could be the right time to introduce the fund, with more confidence returning to the market. He says: “Generally, US equity funds are more of a risk than UK funds but maybe markets are returning to confidence and a degree of calm.” Wright says: “It is an interesting concept that is worth a dabble.”

Looking at the type of client the fund could attract Buswell says: “Clients who are prepared to invest for a minimum of five years and who are prepared, certainly in the short term, for a fairly bumpy ride.” Wright says: Those looking for a spread over several markets.” Lewis says: “Generally, those who are looking at above-average risk over the longer term. Possibly someone who is willing to invest because they are looking for a bounce back in the market. They will be coming in when the market is at a low level.”

Assessing the marketing potential of the fund, Moseley thinks it could be useful as part of global portfolio and Wright thinks it would be difficult to market the fund at this time. Buswell says: “The only realistic marketing opportunity is that of a new fund in the world&#39s dominant market and the &#39buy now while stock is so cheap&#39 opportunity of investing while markets are at the bottom of the cycle.”

Highlighting the main useful features and strong points of the fund Buswell says: “It has a good spread of holdings over a variety of sectors, with some very large and well known names. However, what is really needed now is a dose of self-confidence more than anything else, so that people can start investing again as part of a long-term savings strategy.” Moseley says: “It is a non-specialist fund suitable as a core-US holding.”

Lewis says: “The strong image of UBS as a large American fund manager, featuring at a time when confidence is returning. It is able to go into the market when it is at a seven-year low. It can also use its so-called real knowledge of the US to venture into the UK market.” Wright says: “A manager who takes a different view to most will either be better or worse than he general market. Is this one lucky?”

Discussing the fund&#39s investment strategy Wright says: “I would like to see its performance over the next few months.” Buswell says: “From the promotional material, it looks like UBS really intends this to be a properly actively-managed fund. I hope this is true, as far too many of these funds turn out to be active in name only.” Moseley thinks it is fine for the fund&#39s objectives. Lewis thinks it is very sensible for 65 per cent of the fund to be invested in large caps. He believes this makes it a medium-risk fund for investors, giving a balanced approach in this volatile era of market instability.

Looking at the fund&#39s drawbacks Lewis says: “The timing could well turn against this fund as the retail volumes of Isa and Oeic investments drop. Also, new fund management groups can take time to establish a comfortable approach and name awareness in the UK.” Wright says: “New funds tend to be small in value and this can be a disadvantage. If an investor wants to switch at a later date, the manager may have to adjust his price against those who might wish to leave the fund.” Buswell points out that it is one of so many others.

Evaluating the company&#39s reputation Wright says it is not that well-known. Buswell says: “UBS is one of the largest and best-known investment companies in the world with a sound rather than spectacular investment performance. That said, sound has a rather comforting ring to it in the current economic climate.” Moseley thinks it is solid and well established. Lewis says: “It is well known in the US and is substantial in Europe. It is a new venture in the UK and could be well placed to do well in the future.”

Considering the past performance record of UBS, Moseley points out that it has no track record in the UK. Lewis thinks it is very difficult to assess as there are no statistics, but he says the fund manager is very experienced. Wright thinks it is middle of the road and Buswell says it is sound.

Identifying the main competition the fund could face, Wright says: “Fund supermarkets, with their ability to change fund management companies.” Buswell says: “There is a host of them out there.” Moseley goes for existing blue-chip funds. Lewis suggests existing US equity funds and names Fidelity and Merrill Lynch, which he says are well established in the UK.

Assessing the charges, Buswell says: “They are par for the course although I think an initial charge of 4 per cent and annual 1.5 per cent is too expensive for this type of investment.” Wright thinks the charges are normal and Lewis thinks they are reasonable.. Moseley thinks the charges are fairly standard.

Moving to the commission, Lewis and Wright think it is fair and reasonable. Moseley says: “Commission is totally standard, nothing innovative.”
Looking at the product literature Lewis says: “It is generally well presented but is a little short on performance data.” Wright thinks the product literature is very good. Buswell thinks it is fairly typical for its style and there is nothing in it which catches his eye. Moseley says: “It&#39s all right, if a bit dull.”

Summing up Buswell says: “Being fairly cynical, introducing this fund now would take a fairly unskilled operative to actually make this fund lose money over the next five years. I will watch it with interest but I see nothing new here to make me want to recommend it to clients.” Moseley concludes: “It is nothing special really – only time will tell if the philosophy brings above average performance.”


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