UBS Asset Management Winner
How best to provide diversification? UBS’s emerging market strategy rests on the notion that for a focused portfolio of 25 to 35 best ideas can often serve clients best. EM equities are typically less than 10% of a global investor (although often more for an Asian investor), hence a focused allocation makes sense. The company cites academic research showing that, within an equity portfolio, one achieves over 90% of diversification benefits with 25 stocks.

To make their clients more successful, UBS runs an outreach program, which entails events and thought leadership. Most notable is its annual Sovereign Investment Circle event, where a range of clients from central banks and sovereign wealth funds discuss the changing global investment landscape.

The most recent event featured discussions on the impact of climate change on investment strategies for the next 20 years, opportunities in emerging markets, and how to gauge the long-run competitiveness of countries around the world. These events are geared toward understanding and preparing for the investment challenges of the future.

UBS says its portfolios tend to underperform in periods of extreme market movements where stocks deviate significantly from fundamentals. But it holds fast to its investment philosophy and discipline. Reason: These times offer exceptionally good investment opportunities, leading to strong performance as markets return to fundamentals again.

UBS strategists remain ever alert for shifts on the EM scene. In a late-summer analysis, they wrote that “we overweight emerging market equities versus US
government bonds in our US portfolios. Emerging markets are attractively valued and are geared to the global recovery that we expect in the second half of the year.” And that seems to be working out.”

Emerging Markets Finalists

• Acadian Asset Management

• Avenue Capital Group

• Lazard Asset Management

• Oak Tree Capital Management