The new UBS Multi-Asset Defensive Growth fund appears to adopt a balanced risk profile, targeting a maximum annual drawdown of 10 per cent, which may suit clients that are somewhat cautious and are more in the capital preservation camp.
The fund appears to feature an income generation mandate as well as benefiting from capital growth. It does this by having an asset allocation biased to bonds, helping enhance the fund’s natural yield.
As an actively managed solution, there is an ongoing debate as to whether active management provides sufficient extra return over comparable risk-adjusted passive investment solutions.
We have seen passively managed multi-asset solutions ride the recent market volatility particularly well, relative to many active mandates.
The UBS fund is priced about average in terms of annual fund charges, at 0.86 per cent a year, which is refreshing.
By investing in direct securities and exchange traded funds, the fund is likely to attract clients that are somewhat charge sensitive, yet still prefer an active mandate in order to generate alpha.
Most mainstream passively managed multi-asset solutions tend to focus largely on capital growth. As such, the UBS fund may be suitable for clients who are in a pension drawdown strategy relying on natural yield.
If stock markets have an at best flat performance, relying on funds that provide natural yield may well be the good way forward.
The fund does not fully hedge all currency exposure; therefore investors will be partially exposed to currency fluctuations.
At a time where markets are volatile ahead of Brexit, sharp movements in sterling may bring about volatility in the fund.
Ben Sassoon is pension & investment adviser at Drewberry