Swiss & Global Equities

As Swiss companies tend to be operational on a global scale, it is important to have a worldwide vision and expertise of the global market’s competitive structure when managing Swiss equity. Therefore it is of advantage to manage Swiss & global strategies within one investment team. UBP’s Geneva-based Swiss & Global Equity team has been working together and following the same investment approach since 2006.

The Swiss and US equity markets offer the highest levels of Cash Flow Returns on Investment (CFROI®)* for equity markets. CFROI® is the financial measure which best enables an investor to gauge a company’s value-creation ability. With an investment framework based on companies’ CFROI® lifecyles in place since 2006, UBP’s Swiss and Global Equity investment team focuses on attractively valued opportunities. They build convictions through bottom-up analysis of companies and their environment, incorporating strict environmental, social and governance (ESG) criteria into the process.

Opportunities

The post-Covid-19 environment is expected to offer limited visibility on prospects for economic recovery, with earnings uncertainty lingering and numerous companies withholding guidance for the medium term.

Active investment approach to provide stability in volatile markets
Superior risk adjusted returns through Swiss equities’s superior value creation and ESG focus
Strong selection process for lower turnover and medium- to long-term focus

An active investment approach with an experienced stock-picking ability, focusing on the medium to long term rather than short-term movements, should provide equity investors with the needed stability and agility to navigate this volatile period.

The Swiss equity market remains one of the most resilient markets, offering superior risk-adjusted returns over the short and longer term versus other regional and global equities. This structural outperformance is driven by Swiss equities’ superior value creation and ESG profiles.

UBP’s Swiss & Global Equity strategies continue focusing on value-creating quality companies and remain well positioned for short-term momentum as well as long-term structural drivers, without the need to time markets or themes.

Investment philosophy & process

A company's CFROI®s are consistent indicators of its ability to create value for investors, and best reflect its management’s decision-making process.
Corporations tend to follow a similar profitability life cycle, reflected by their levels of CFROI®, which allows for comparison of companies across sectors and countries.
By choosing to follow the investment approach put in place by UBP’s Swiss and Global Equity team since 2006, an investor will be gaining access to attractively valued opportunities across the CFROI® lifecycle, with well diversified geographical and sector exposures along with superior ESG profiles.
The strong multi-year track record the team has built around bottom-up stock selection demonstrates the resilience of the investment process in the medium term and in different market conditions.
Active stock selection explains the majority of excess returns…
…but it is important to manage the degree of active risk. Active management of portfolio tracking error is part of the team’s approach to portfolio construction and risk.

*Concept of the CFROI® life cycle

During a typical company’s life, its business generates varying levels of cash flow return on investment (CFROI®) reflecting its stage of development: growth, maturity or decline. While superior CFROI®s tend to fade down to the Cost of Capital (CoC) as value creation attracts competition, inferior returns may “fade up” to the CoC as a result of restructuring or competitors exiting the market. The team seeks to identify companies with consistent, superior CFROI®s that steadily create value over the long term which is not yet discounted by the market. The team also looks for turnaround stories that are undervalued and for companies experiencing a phase of accelerating growth that may not yet be fully appreciated in terms of the magnitude and duration of the widening positive spread between CFROI® and CoC.

CFROI® - Source: Credit Suisse HOLT

Product range

Co-Head Swiss & Global Equity Portfolio Management

Eleanor Taylor Jolidon

Eleanor’s experience in the finance field started back in 1993. Since 2004 she has focused on analysing and managing Swiss & global equity. She holds an MA from Trinity College, Cambridge and a DHEE from the College of Europe, Natolin.

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Co-Head Swiss & Global Equity Portfolio Management

Martin Moeller

Martin Moeller joined UBP in 2006 after working for 14 years at Deutsche Bank in equity research and portfolio management. Martin holds an MA in Banking and Finance from the Frankfurt School of Finance & Management and is a CFA charterholder. Martin is the author of Strategic Concepts of Universal Banks, published in 2000.

Recorded on 21.08.2020

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