Grant Bughman, client portfolio manager, UBS US Growth Fund
Fund has just reached three year anniversary
• Three years to 10 November 2011 Fund up 64.5%, against sector average rise of 36.5%1
• Based on a strategy that has run since 2000, outperforming in both rising and falling markets
• Portfolio invests in US stocks with $2.5bn market cap and above
• Look for stocks that can outperform the market over a full market cycle
• A strong core holding: the Fund has beaten both Russell 1000 Growth benchmark and the S&P 500 since launch2
Portfolio typically has 45 stocks
• Portfolio is built from the bottom up
• Team looks for stocks with growing market share or improving pricing power
• It focuses on stocks with high ROIC (Return On Invested Capital
• Particular focus on business models that have sustainable growth trends over the long-term
• Team diversifies across three different types of business
• ‘Classic’ growth – market fluctuations create opportunities to purchase great businesses at attractive prices
• ‘Elite’ growth – hyper growth phase can often lead to mispricing by the market
• ‘Cyclical’ growth stocks - pricing anomalies occur when expected future value exceeds current market prices
Identifying and controlling risk – identifying stock risk is the key
• UBS examine worst case scenarios for its stocks, not just the upside
• A big focus is placed on having a disciplined sell process
• Risk is primarily examined at the stock level but the process also takes into account the macroeconomic environment
• Diversification across three separate types of growth stock groups to reduce volatility
• Relative to benchmark, Fund can have 15% over/underweight at sector and typically 5% over/underweight at stock level
Fund has a dedicated team of nine investment professionals on it, based in New York
• Fund is headed by lead portfolio manager Lawrence Kemp, supported by Grant Bughman and seven analysts
• Team operates as US Growth specialist boutique but able to draw on broader resources available at UBS
Fund has been actively managing its weights across the three different types of growth stock
• Currently has 48% exposure to ‘elite’ growth – particular focus on IT and consumer discretionary sectors3
• 43% exposure to ‘classic’ growth stocks3
• In last two months, the Fund has almost doubled exposure to cyclical growth stocks (now 9%), with particular focus on energy and materials stocks3
• Corporate America appears to have weathered the tough economic backdrop better than initially expected
A growth strategy makes sense in the current low growth economy
• Growth benchmark has low exposure to financials: a sector with no shortage of headwinds
• In an environment of low economic growth, investors are looking for stocks with sustainable earnings growth potential
• The US remains the world’s largest economy: it has an entrepreneurial market and is global in outlook; therefore having exposure to growth within Asia and Emerging Markets
• For investors looking to invest in a US equity fund that is: mindful of risk, with the ability to outperform in both rising and falling markets, then the UBS Growth Fund is worth further attention and consideration
Important Information
Important Information
This communication is for IFAs and Professional Clients only. It is not to be distributed to or relied upon by Retail Clients under any circumstances.
This communication may not provide a full explanation of all the topics that were discussed. Care has been taken to ensure the accuracy of the content, but no responsibility is accepted for any errors or omissions.
Please note that past performance is not a guide to future performance. The value of investments and the income from them may go down as well as up, and are not guaranteed. Investors may not get back the original amount invested. Changes in rates of exchange may cause the value of this investment to fluctuate. The Fund is permitted to and may on occasion hold a limited number of investments.
This interview is a marketing communication. Any market or investment views expressed are not intended to be investment research. This communication has not been prepared in line with the FSA requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. The information contained in this communication should not be considered a recommendation to purchase or sell any particular security and the opinions expressed are those of UBS Global Asset Management and are subject to change without notice.
This communication does not create any legal or contractual obligation with UBS Global Asset Management.
Information reasonably deemed to be commercially sensitive and obtained from UBS Global Asset Management (UK) Ltd should not be disclosed. We also request that any information obtained from UBS Global Asset Management (UK) Ltd in your possession is destroyed as soon as it is no longer required.
UBS Global Asset Management (UK) Ltd is a subsidiary of UBS AG, 21 Lombard Street, London EC3V 9AH. Authorised and regulated by the Financial Services Authority. Telephone calls may be recorded.
© UBS 2011. The key symbol and UBS are among the registered and unregistered trademarks of UBS. All rights reserved.
www.ubs.com | 0800 587 2111
