UBS Global Wealth Management has added hedge funds to its flagship sustainable multi-asset portfolio and at the same time has launched an Asia-focused cross-asset sustainability portfolio, with up to 30% Asia exposure across equities and bonds, to tap the increasing demand for sustainable investment in the region.
The Swiss bank launched its sustainable multi-asset portfolio, a type of discretionary portfolio management solution, in 2018 and so far has attracted roughly $4.5bn in assets across Hong Kong and Singapore, Mario Knoepfel, head of sustainable investing advisory for Asia Pacific at UBS Global WM, told FSA.
In April this year, UBS Global WM added an Asia-focused sustainable portfolio, which Knoepfel said was designed to tap the demand among some clients to have exposure to their home market as well as the increasing number of Asia-specific strategies available.
“Why did we want to do this? Firstly, we had quite a number of clients with a preference for more Asia exposure. But also it is only in the last couple of years that sustainability strategies with a very clear Asia distinction have emerged.”
In particular, Knoepfel noted that only a few years ago there were hardly any fixed-income strategies available, although the number has proliferated lately.
He also noted that on an index level, there was the biggest delta between the broader index and its sustainability counterpart in any region, which was another reason why it made sense to launch an Asia version.
At the same time in April, UBS Global WM added hedge funds to its global sustainable multi-asset portfolio.
Hedge funds are growing in popularity among distributors, particularly macro and CTA funds, because of their uncorrelated returns to public markets and their ability to exploit the recent market volatility.
Although, Knoepfel noted that this was not the motivation for adding a hedge fund sleave to the global portfolio and that the primary reason was that the number of strategies available with a sustainability focus has increased lately.
However, he noted that hedge funds played an important role because of their ability to short stocks as well as their activism, which can help push companies towards better ESG outcomes.
He also noted that as well as onboarding various hedge funds strategies, the portfolio also gives investors exposure to the voluntary carbon markets.
