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UBS says hedge fund growth set to continue

GLOBAL – UBS, reporting a more than doubling of its hedge fund assets, says growth in the asset class is “set to continue”.

The bank said that invested assets at the alternative and quantitative investments arm of its Global Asset Management business have more than doubled to 26 billion Swiss francs (16.7 billion euros) since the unit was formed in early 2003.

The business operates its own hedge funds and offers multi-manager (funds of funds) portfolios, UBS said.

It said interest in hedge funds has grown rapidly “and growth is set to continue as individuals and institutions search for higher risk-adjusted returns”. UBS said it is one of the world’s largest hedge fund managers.

UBS also reported that it won 10.1 billion francs of new institutional asset management business in the first quarter, a record. A year ago it posted a 3.9 billion-franc increase.

“This was the best result since 1999 and reflects the strength of our long-term investment performance,” UBS said. It said it won equity mandates in the UK and Europe, Middle East and Africa region as well as multi-manager hedge fund mandates.

First-quarter pre-tax profit at Global Asset Management rose 29% to 144 million francs. Institutional revenue at the unit was up 52 million francs at 280 million francs.

“The increase was mainly attributable to higher management fees reflecting the strong net new money inflows and continued strong market valuations,” the bank said.

Institutional fees rose 41% to 280 million francs. The gross margin in the business rose to 35 basis points from 30 basis points in the fourth quarter of 2003.

Global Asset Management’s invested assets rose to 335 billion francs, up 27% on the end of the first quarter of 2003.

Overall, UBS’ net profit doubled to 2.423 billion francs from 1.21 billion francs a year ago

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