Asset allocation is probably the most important decision investors make. It forces them to take a long-term, strategic view of the world, and encourages them to consider a broad range of asset classes. Most academic studies show that asset allocation is the main driver of both long-term portfolio returns and volatility.
UBP seeks to exploit the potential of asset allocation to the full. Our balanced portfolios for private and institutional clients undergo rigorous back-testing so that they provide our clients with the best risk-adjusted combination of asset classes and can protect the value of their assets in volatile markets.
While many traditional balanced portfolios suffer from a lack of diversification and overexposure to equities and government bonds from developed markets, our balanced portfolios invest in a wide range of diversifying asset classes including emerging market equities and bonds, several classes of fixed income, alternatives, gold and other commodities.
We also use tactical asset allocation to exploit short-term opportunities in the markets. Asset class valuations change rapidly in response to economic, market and political developments, and we quickly adjust our portfolios’ exposure to capitalise on mispricing.
Our Multi-Asset team consists of over 20 investment professionals and includes experts in each of the major asset classes as well as macroeconomic, risk and quantitative specialists.
They have set up our balanced portfolios as follows:
- they emphasise diversification: making them more robust and capturing a broader opportunity set, especially within fixed income
- a major bias towards emerging markets
- a significant allocation to hedge funds: we believe in the power of alpha over beta, and in the decorrelation benefits of hedge funds
- carry is valuable: coupons make the difference in a period of low rates and less compelling equity valuations, so we like emerging debt, investment-grade credit and convertible bonds.
