UBS Global Asset Management (UBS GAM) has launched two alternative beta passive funds, structured as open-ended investment companies (Oeics).
The UBS FTSE RAFI Developed 1000 Index Fund and the UBS MSCI World Minimum Volatility Index Fund have been launched in response to client demand, says the firm which entered the alternative beta market in 2010.
Currently available to institutional investors, UBS GAM anticipates that retail share classes will be issued in the near future.
UBS has managed passive equity mandates for over 30 years and the indexing team currently manages over £11 billion (€15 billion) benchmarked to non-market cap weighted indices.
UBS launched three UK Life Funds benchmarked to alternative beta indices in April 2014, with a further two later that year.
Ian Barnes, head of UK & Ireland, says: “Whilst market cap weighted indices have many advantages, including broad diversification and high liquidity, they do have a systematic flaw. This flaw may mean investors can end up holding more stock that is overvalued and less that is undervalued – the opposite of what many would see as most pragmatic.”
He says that investors in the UK are interested in the benefits of alternative beta strategies, adding that UBS’ clients are increasingly opting for a combination of passive strategies that track both traditional and alternative indices to diversify exposure across a range of risk factors and sources of returns.
UBS GAM had assets under management of £442 billion as at June 30, 2015.
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