The returns are linked to the performance of the LTA Series, an index based on an equal weighting (20% each) to five of UBS AG Group’s proprietary investment strategies. The performance of the LTA Series is based on the returns generated by the application of these five proprietary investment strategies.
These strategies are managed by the UBS AG Group who are located in key financial market locations such as Tokyo, London, New York and Sydney.
The five UBS AG Group investment strategies that comprise the LTA Series are set out below. For additional detail on each strategy we recommend investors visit the Quattro website at www.quattroam.com.au.
- UBS AG Global Equities Buy-Write strategy (EBW)
This strategy aims to produce stable returns in rising and falling markets by combining long index positions on the DJ Euro Stoxx 50 and S&P500 indices with the sale of one month in-the-money call options with the objective of generating coupon income.
- UBS AG Global Equities Long/Short Alpha strategy (ELSA)
This is a long/short portfolio strategy based on UBS AG Group’s equity research. The strategy aims to generate positive returns in rising or falling markets by taking long positions in investments that are expected to increase in value and short positions in investments that are expected to decrease in value. The strategy aims to buy 50 relatively cheap stocks identified as likely to have a positive development in earnings estimates and sell 50 relatively expensive stocks identified as likely to have a negative development in earnings estimates. The stocks are selected having regard to earnings estimates and relative cheapness, as estimated by UBS AG Group based on dividend yield and price/earnings ratios. The portfolio is rebalanced each quarter.
- UBS AG Global Equities Risk Adjusted Dynamic Alpha strategy (RADA)
The strategy uses the UBS AG Group’s dynamic equity risk indicator developed by the UBS AG Group to aim to identify when an investment should be long or short in the DJ Euro Stoxx 50 Index and the S&P500, or in cash. The strategy’s objective is to achieve consistent positive returns.
- UBS AG Equities Volatility Arbitrage strategy (EVA)
This strategy aims to exploit the difference in the anticipated equity market volatility and the realised equity market volatility through selling one month swaps in a risk-controlled manner, having regard to and adjusting for the relative risk of the swaps and their potential returns. The strategy is based on the DJ Euro Stoxx 50 Index and the S&P500 Index. This strategy aims to generate positive returns in volatile markets. - UBS AG Global Currencies G10 Carry Trade strategy (G10)
This strategy aims to invest in three high yielding currencies and to sell three low yielding currencies from the G10 universe. The G10 universe consists of the JPY (Japan), USD (USA), EUR (euro), NZD (New Zealand), AUD (Australia), GBP (UK), SEK (Sweden), NOK (Norway), CAD (Canada), CHF (Switzerland). The strategy aims to generate positive coupon income and is controlled by a UBS AG Group risk indicator measuring the degree of risk aversion in the relevant financial markets. In times of risk aversion, the strategy aims to reverse the positions. The risk indicator is based on seven factors such as foreign exchange rate volatility, the price of gold in Euros and US dollars and the relationship between US government bonds and stocks.
Investors should note that there is no guarantee that any of these strategies will achieve its aim or objective. These aims and objectives are not forecasts or projections and are provided solely so that investors can understand the strategies’ objectives.
Importantly, from an investment perspective, the selected strategies have a history of low correlation to each other. This means that the past performance of each strategy was not interdependent on any of the other strategies. The past performance of these strategies is not a reliable indicator of their future performance.
