Every month in IPE we analyse a fund using the return-based Portolio Style Analyser by London-based firm Style Research, using the fund’s historic data of the past four years obtained from Standard & Poor’s Micropal.
This month we have analysed the investment style of the UBAM US Equity fund, managed by Luxembourg-based Union Bancaire Privée.
The fund was launched in 1990, and has had a very good performance during the past few years. The investment objective of the fund is to achieve long-term capital growth by investing in the US equity market.
The graph shows the changes in investment style that the funds has had in the past 12 months starting in October last year. Since the Portfolio Style Research analysers use multiple returns, we used the last four years’ historic data of the fund, starting in November 1996.
The UBAM US Equity fund is an obvious example of a growth-oriented fund. The chart indicates how, at the beginning of the period analysed, all the fund’s assets were invested in large growth stocks. This approach changed during the first few months of the year when the fund’s exposure to large value shares increased. According to the results of the analysis, since February, and even though exposure to growth US equity was only below 70% in two occasions, in June and September with around 67%, the presence of large value shares has become an important part of the fund’s portfolio. In March the percentage of large value stocks in the fund’s investment strategy was 25% and this figure has increased since then , although not very significantly. The percentage of these stocks at the end of October was around 27%. The managers’ investment strategy is to choose those companies across different sectors which shows the highest potential of growth, instead of focusing only on specific sectors, in order to achieve diversification and control risk.
The UBAM US Equity fund is five-star rated by Standard & Poor’s. The fund has a 63.26% three-year performance with a volatility of 6.35. From 1995 to 1997, the fund outperformed the US equity sector average. The best returns were achieved in 1996 when the fund performed 39.91% well above the sector’s returns average of 10.51%.
The fund’s size at September this year was $86.26m. The average size of the US equity sector funds is around $148m.
Although the portfolio will normally include only equity investments, it could also make use of other asset classes, such as convertible bonds, at certain points. The fund could also invest up to 25% of its assets in Canada and 10% in Mexico, without exceeding 25% of total investments between the two of them.
In 1999 the average returns were 8.23%, while the sector average was around 13%. During the first months of the period analysed in the chart, when the fund’s investments were 100% large growth-oriented, the performance of the fund was below the sector’s average, according to data from Micropal. The UBAM US equity fund’s returns have been higher than the sector’s average since April. The best returns were achieved during the last three months.
UBAM US Equity fund, a Luxembourg-based SICAV, is directed at private and institutional investors seeking long-term capital growth. At the end of the period analysed the fund showed a cumulative return of 361.7781.