At UBP, we believe that a good risk management process is a necessary prerequisite for a robust return-generation process. To be successful, a portfolio manager also has to be a good risk manager. We have thus set up our proprietary decision support systems and differentiate between extreme risk and ‘normal’ volatility risk. Our strategies are put in place so as to manage these two different types of risk.
Risk management plays a central role in our investment philosophy:
Our investment solutions are grouped into three main categories, depending on the underlying investment universe: multi-asset class, single-asset class and overlay-only investment solutions. Each investment solution is characterised by a specific risk-management and performance-generating process.
We can offer dynamic downside protection solutions on rates and equities, as well as on multi-asset class portfolios. Additionally, we can design volatility carry solutions, uncorrelated from the traditional asset classes; these allow an investor to get a premium from being short on volatility and to increase portfolio diversification.
With its convex profile, UBP’s asymmetry strategy aims to improve portfolio’s efficiency.
Over the years, UBP has come to specialise in two single assets for which it provides specific volatility strategies: gold and European equities. The goal here is to outperform the relative indexes while minimising volatility and drawdowns (extreme risks).
More specifically, for the European equities strategy, the objective is to replicate UBP’s European equities strategy and add overlay risk management to it, offering cost-efficient downside protection. This specifically enables an investor to start investing in European equities without taking the full equity risk.
With this strategy, the aim is to efficiently hedge the risk on an equity portfolio while minimising the cost of protection.
The investment process blends three main elements:
a) a discretionary analysis of the general macroeconomic context;
b) an objective assessment of the prevailing market conditions, based on a set of quantitative tools; and
c) careful portfolio construction and calibration of the overlay components.