Making a quiet noise

UBS Asset Management may not be the oldest name in the local market but, ironically, has been working at establishing a solid presence for over fifteen years.

And while its' low key status may give the impression it has not succeeded in doing that too well, that impression would be wrong.

This is evidenced in the fact that UBS Asset Management (UBSAM) has been named as a finalist in the Australian equities and Australian fixed interest categories for this year's fund manager of the year award.

It was also named as one of the three finalists for the overall award but has never been named, in any category for the award, up to this date.

So what has being going on in the offices of UBSAM for them to suddenly burst onto the scene in this way?

VIEW ALL

View all

UBSAM began life in Australia as Dominguez Barry Samuel Montagu in 1985 and over the next ten years went through two more name changes before becoming SBC Brinson in July 1995, after that group assumed full ownership.

In June 1998 the Union Bank of Switzerland and Swiss Bank Corporation (SBC) merged to form UBS AG with the new group integrating UBS Asset Management and SBC under the UBS Brinson banner.

However a year ago the UBSAM name was once again brought to the fore as the group geared for its first push into retail.

Business development director Colin Woods says the recent rash of publicity was not unexpected and is in keeping with them setting themselves up for a tilt at the local retail market.

The group is traditionally known as a fixed income wholesale manager has had a managed funds presence via master trusts up to date and according to Woods the group has been concentrating its energies on those two sectors.

By doing so the group has been given a chance to test the waters and get down the required years of track record with ratings houses before offering products into the retail side of the market.

"It does takes a while to build a profile and research houses, along with investors and planners want to see a three to five year track record. Most want to see how we have gone through a whole business cycle," Woods says.

At the moment the group already has a single retail product which is pitched at the mezzanine level. This is an Australian enhanced share fund which it first made available about a year ago.

The product was introduced to planners after UBSAM dropped the entry level from $50,000 to $20,000 and introduced a dial up trailing commission from zero to one per cent.

After twelve months on the market the product has had dial up fees of between zero to three per cent added in an attempt to pitch the product to those advisers who may work from a fee basis, as well as those who may use commissions or a combination of both.

"It was a case of seeing that if we didn't offer this type of fee arrangement we were cutting out part of the adviser market," Woods says.

"It also says UBS manages the funds of a client and our fee is set. The rest of the entry fees and trails are then set by the adviser and their client and we have nothing to do with that."

So far the fund has attracted about $10 million per month into the fund, giving it a healthy balance of $120 million after a year and has recorded returns above 14 per cent for the last four years.

Woods says the group is expecting even more from the fund and has added two more business development team members to deal with future growth, resulting two each in Sydney and Melbourne.

At present Woods says UBS products have been picked up by 10 national planning groups and around 3500 planners have access to them.

"Interest has been from across the board, from single planner practices to large dealers and fund managers, as well as ongoing business through master trusts and wraps," Woods says.

"Much of this support has come from investors disenfranchised with more volatile managers and planners looking for someone new to add to portfolios. Our main presence has been in fixed interest, and as an unknown it was a case of changing that and now planners are giving us a go."

Globally the UBS group, which includes UBS Switzerland and UBS Warburg, has $580 billion under management, of which $190 billion is in managed funds.

Australian operations, at March 2001, account for $12.4 billion of that figure with around 60 per cent tied up in fixed income and cash. The balance of the funds are in local and international equities, international fixed income and private markets.

Woods says the push into managed funds is not just a local strategy but one the group has adopted world wide a year ago, coinciding with the timing of its changes to its Australian share fund.

And despite the fact that most of its business is in Europe Woods says the local operations have plenty of room for growth built in to the current model.

"We will still leverage off the institutional business into the retail market and are working on our name and profile. Dependent on what works and what support investors will offer to us, we have hundreds of funds we could bring into the country."