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Emerging Markets 360° Rethinking Indexed Emerging Markets Investments
UBS Asset Management UBS Exchange Traded Funds
Zurich, 16th January 2018
For qualified investors only
For marketing purposes
1
Table of contents
• The Big Picture Emerging Markets Investing
• Indexed emerging market equities
• Indexed emerging market debt
• Value Proposition UBS Asset Management
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0%
10%
20%
30%
40%
50%
0%
2%
4%
6%
8%
10%
12%
14%
16%
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
MSCI EM Weight of MSCI ACWI (LHS) EM GDP Share of Global GDP (RHS)
Forecast
Economic vs. market performance
Emerging markets have gained substational relevance
EM in ACWI EM GDP of Global GDP
Source: MSCI, IMF, World Bank, UBS AM. Data as of August 2017.
45%
11%
3
Market performance: Emerging vs. developped
Long-term relative performance shows cyclicality and idiosyncrasies
Source: Barclays, UBS AM. Data as of August 2017.
Equity Fixed Income
Cycle length ~ 5–7 years Cycle length ~ 3–5 years
50
100
150
200
250
300
350
400
Dec-87 Dec-90 Dec-93 Nov-96 Nov-99 Nov-02 Oct-05 Oct-08 Oct-11 Sep-14 Sep-17
Relative Performance
MSCI Emerging Markets USD / MSCI World USD [LHS]
0
50
100
150
200
250
80
90
100
110
120
130
140
150
160
Jan-93 Jul-95 Jan-98 Jun-00 Dec-02 May-05 Nov-07 Apr-10 Oct-12 Apr-15 Sep-17
Relative Performance
Barclays EM USD Aggregate / Barclays Global USD Aggregate [Price Return Index, LHS]
Barclays EM USD Aggregate / Barclays Global USD Aggregate [Coupon Return Index, RHS]
Asian and Russian Crisis
Mexican Crisis
Argentinian and Turkish
Crisis
Financial Crisis
Oil Crisis
4
10.0%
4.9%
0%
2%
4%
6%
8%
10%
MSCI Emerging Markets MSCI World
Index Performance TR Net USD (Dec’00 – Aug‘17)
8.4%
4.6%
0%
2%
4%
6%
8%
10%
Barclays EM USD Aggregate Barclays Global Aggregate
Index Performance TR USD (Dec’00 – Aug‘17)
A strong investment rationale for emerging markets
Long-term relative outperformance
Equity Fixed Income
Source: MSCI, Barclays, UBS AM. Data as of August 2017.
2x
5
Emerging market equity ETF flows
Source: ETFGI, UBS AM. Data as of 30 September 2017. 1) Based on European and US domiciled ETFs
In Europe In US
YTD flows into EM equity are nearly at USD 40.8bn1
+ YTD NNM 8.4bn + YTD NNM 32.4bn
(6'000)
(4'000)
(2'000)
0
2'000
4'000
6'000
8'000
10'000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Cumulated NNM in USD mn
2017 2016 2015 2014 2013
(15'000)
(10'000)
(5'000)
0
5'000
10'000
15'000
20'000
25'000
30'000
35'000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Cumulated NNM in USD mn
2017 2016 2015 2014 2013
6
Emerging market debt ETF flows
Source: ETFGI, UBS AM. Data as of 30 September 2017. 1) Based on European and US domiciled ETFs
YTD flows into EM fixed income are nearly at USD 15.7bn1
In Europe In US
+ YTD NNM 9.3bn + YTD NNM 6.4bn
(6'000)
(4'000)
(2'000)
0
2'000
4'000
6'000
8'000
10'000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Cumulated NNM in USD mn
2017 2016 2015 2014 2013
(6'000)
(4'000)
(2'000)
0
2'000
4'000
6'000
8'000
10'000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Cumulated NNM in USD mn
2017 2016 2015 2014 2013
Indexed emerging market equities
Section 1
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0%
3%
6%
9%
12%
15%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Weight of BRIC in MSCI EM
China in EM (LHS) Brazil in EM (LHS) Russia in EM (LHS) India in EM (LHS) EM wgt in ACWI (RHS)
10%
1%
EM Weight in MSCI ACWI
Emerging market equity index – nearly 30 years
Source: MSCI, UBS AM. Data as of August 2017.
Growing importance, diversity and coverage
10 countries USD 52bn
24 countries USD 4.9tr
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Sector dynamics
Growing importance of IT and Financials
Source: MSCI, UBS AM. Data as of September 2017.
0%
20%
40%
60%
80%
100%
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Sept2017
Information Technology Financials Consumer Discretionary MaterialsEnergy Consumer Staples Industrials Telecommunication ServicesReal Estate Utilities Health Care
• Tencent Hold. • Samsung • Alibaba • Taiwan
Semiconductor. • Baidu
Sector breakdown of MSCI EM
• China Construction Bank.
• ICBC
• Naspers
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Evaluating emerging market equity indices: MSCI vs. FTSE
Source: MSCI, UBS AM. Data as of August 2017
They are not the same
Market Characteristics Market Accessibility Economic Development
-2.0%
-1.5%
-1.0%
-0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
1 year 2 years 3 years 5 years 10 years 15 years
MSCI EM vs FTSE Emerging Index for diffrent investment horizons (cumulative outperformance) Based on TR Net in USD, Dec’01 – Aug’17
Superiority of MSCI
Superiority of FTSE
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4% 5% 6% 7% 8% 9%
MSCI EMSmall Cap
MSCI EM
MSCI WORLDSmall Cap
MSCI WORLD
The index matters: MSCI EM vs. MSCI EM IMI
Source: MSCI, UBS AM. Data as of July 2017.
Small cap premium has been negative in emerging markets
MSCI EM vs MSCI EM IMI (Daily Price Index Data, May’94 – Aug‘17)
Small Cap Premium (Daily Price Index Data, May’94 – Aug‘17)
+1.93%
-0.23%
80
85
90
95
100
105
110
115
120
May-94 Apr-98 Mar-02 Jan-06 Dec-09 Nov-13 Sep-17
MSCI EM / MSCI EM IMI relative performance
MSCI EM has average outperformance of 49 bps since May' 94
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Sustainable investing in emerging markets
The ESG profile of emerging market companies is not as “green” as of developed market companies
Source: Bloomberg, MSCI, UBS AM. Data as of September 2017.
Developed Emerging
0%
5%
10%
15%
20%
25%
30%
AAA AA A BBB BB B CCC
MSCI World ESG Rating Distribution
AAA AA A BBB BB B CCC
0%
5%
10%
15%
20%
25%
30%
AAA AA A BBB BB B CCC
MSCI EM ESG Rating Distribution
AAA AA A BBB BB B CCC
1) exclusion (tobacco, alcohol etc.) 2) best-in-class ESG-rated companies 3) minimum ESG controversies
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2.7%
1.3%
4.6%
4.2%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
MSCI EmeringMarkets
SRI*
MSCI EmeringMarkets
MSCI WorldSRI**
MSCI World
Relative performance (TR Net USD)
Sustainable investing is relevant in emerging markets
Inclusion of best-in-class ESG companies results in substantial country re-allocation
ESG Value Added Country Breakdown
* Based on MSCI Emerging Markets SRI 5% Issuer Capped Net Return Index in USD (full history since May‘11 to Sep‘17) ** Based on MSCI World SRI 5% Issuer Capped Net Return Index in USD (full history since Sep ‘07 to Sep‘17) Source: MSCI, UBS AM. Data as of September 2017. Note: Carbon reduction measures are based on carbon footprint (tons CO2e / $m Invested) sourced from MSCI ESG.
7.6% 6.2%
2.8% 2.8%
2.2%
-1.9% -24.8%
-25% -20% -15% -10% -5% 0% 5% 10%
IndiaSouth AfricaSouth Korea
BrazilMalaysiaThailand
IndonesiaTaiwan
ChileMexico
PhilippinesCzech Rep
HungaryUAE
PolandPakistan
EgyptColombia
QatarGreece
PeruTurkeyRussiaChina
MSCI EM SRI – MSCI EM
-37%
Reduction of carbon emission
-42%
Reduction of carbon emission
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Indexed emerging market equities – Key takeaways
Source: UBS Asset Management. AuM as of 28 December 2017.
Fund name Fee AuM
(CHFm)
NAV
ccy
Replication Distribution ISIN Bloomberg
UBS ETF (LU) MSCI Emerging Markets UCITS ETF 0.45% 1'187 USD Physical Yes LU0480132876 EMMUSA SW
UBS ETF (IE) MSCI Emerging Markets SF UCITS ETF 0.26% 2'837 USD Synthetic No IE00B3Z3FS74 EGUSAS SW
UBS ETF (LU) MSCI Emerging Markets Socially Responsible UCITS ETF 0.53% 391 USD Physical Yes LU1048313891 MSRUSA SW
UBS ETF (LU) MSCI World Socially Responsible UCITS ETF 0.38% 547 USD Physical Yes LU0629459743 WSRUSA SW
UBS ETF (IE) MSCI ACWI hedged CHF SF UCITS ETF 0.31% 4'878 CHF Synthetic No IE00BYM11L64 ACWIS SW
The role of the emerging markets has substantially increased over the last 30 years, and currently Emerging Markets represent more than 10% of the entire equity exposure.
Emerging markets equity correlates less with DM markets and can enhance portfolio return.
Broad-based index solution allow to access emerging equities efficiently, but selecting the right index is key.
Small cap premium has been negative in emerging markets.
Sustainability investing in emerging markets has created additional return for investors.
Indexed emerging market debt
Section 2
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Emerging market debt landscape
0
500
1'000
1'500
2'000
2'500
3'000
3'500
4'000
2003 2005 2007 2009 2011 2013 2015 2017-Sep
Market Capitalisation (in USD bn)
EM Local Government EM USD Sovereign EM USD Corporates
Emerging market debt has grown in significance and become substantial segment of indexed opportunities*
~4 trillion USD
~55% of US Treasury
US Treasury
7.3
USD Corp 4.8
EM Local Govt 2.0
EM USD Agg 1.9
US High Yield 1.3
Amount Outstanding (in USD tr)*
Source: Barclays Point, UBS AM. Data as of September 2017. * Based on Barclays and JP Morgan indices.
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0%
1%
2%
3%
4%
5%
6%
7%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
China Mexico
Brazil Argentina
Indonesia Russia
Turkey Venezuela
United Arab Emirates S.Korea
EM debt USD relative to Global Treasury
Emerging market debt landscape
Source: Barclays Point, Bloomberg Barclays EM USD Sovereign + Quasi-Sovereign, UBS AM. Data as of September 2017.
31 countries
USD 277bn
73 countries
USD 1.4tn
Growing importance, diversity and coverage
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A strong investment rationale for emerging markets debt
Source: Barclays Live, UBS AM. Data as of September 2017.
Emerging market bonds outperform other segments
Yields Return and Risk
0%
5%
10%
15%
20%
25%
Jan-00 Mar-02 May-04 Jul-06 Sep-08 Nov-10 Jan-13 Mar-15 May-17
Yield-to-Worst (monthly data Jan’00 – Sep’17)
Barclays EM USD Barclays US TreasuryBarclays US HY Barclays USD Corporate
0%
2%
4%
6%
8%
10%
Barclays EM USD Barclays US HY Barclays USDCorporate
Barclays USTreasury
Annualized return and volatility (monthly data Jan’00 – Sep’17)
Return Volatility
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Return characteristics and liquidity
Strong contribution from sovereigns, overall emerging market debt offers a solid liquidity
Source: Barclays POINT, UBS AM. Data as of September 2017.
7.2%
7.4%
6.9%
5.0%
5.5%
6.0%
6.5%
7.0%
7.5%
8.0%
EM USD Aggregate EM USD Sovereign EM USD Corporate
Annualised Returns (10Y period) (in USD, monthly data Sep’07 – Sep’17)
0
1
2
3
4
5
6
7
Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Sep-17
Liquidity Cost Score (10Y period) (in %, monthly data Sep'07 - Sep'17)
EM USD Aggregate EM USD SovereignEM USD Corporate US HY
∆ 𝒊𝒏 𝑳𝑪𝑺 up to 200 bps
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Emerging market debt by maturity bucket
Short-end positioning pays off
0
0.05
0.1
0.15
0.2
0.25
EM USD Sovereign EM USD Corporate EM USD Sovereign EM USD Corporate EM USD Sovereign EM USD Corporate
Maturity[1,5) Maturity[5,10) Maturity[10,)
Risk-Adjusted Excess Return over Duration-Matched Treasuries (monthly data in USD, Sep '07-Sep '17)
Source: Barclays POINT, UBS AM. Data as of September 2017.
Less return per unit of risk
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0%
2%
4%
6%
8%
10%
12%
14%
Barclays Emerging Markets USD Sovereign + Agency 3% Country Cap Barclays Emerging Markets USD Sovereign + Quasi-Sovereign
18%
16%
Diversifying issuer risk with a smarter index
Increased diversification with a 3%-single issuer cap
Source: Barclays Live, UBS AM. Data as of September 2017.
EM countries with more outstanding debt
EM countries with less outstanding debt
22
7.5%
7.7%
7.9%
8.1%
8.3%
8.5%
8.7%
Barlclays EM USD Sov +Quasi Sov
Uncapped
Barlclays EM USD Sov +Quasi Sov
10% Capped
Barlclays EM USD Sov +Quasi Sov
5% Capped
J.P. Morgan EMBI Global
Uncapped
J.P. Morgan EMBI GlobalDiversified
10% Capped
J.P. Morgan EMBI GlobalCore
Capped at 2x AverageCountry Weight
The impact of capping on performance: long term perspective (monthly data Jan’04 – Sep’17)
Impact of increased diversification
Source: Barclays Live, UBS AM. Data as of September 2017.
∆= 40 bps
Regardless of indexation, issuer capping is effective and adds value
∆= 20 bps
Barclays JP Morgan
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Emerging market debt indices
Source: Bloomberg. Barclays Live, UBS AM. Data as of August 2017.
Barclays Emerging Market USD Sovereigns 3% Capped with the strongest performance
5.0%
5.7% 5.7%
5.0%
6.8%
2%
3%
4%
5%
6%
7%
8%
Barclays EM USD Sovereign+ Quasi Sovereign 3%Capped [BEMUTRUU]
JP Morgan EMBI GlobalCore [JPEICORE]
Citi EM USD Global Bond[SBGIMS]
Barclays EM USD Sovereign+ Quasi Sovereign
[BESQTRUU]
iBoxx USD Liquid EMSovereigns [IBOXUSLT]
Index LiveTrack Performance, Annualized Returns and Volatility (TR USD monthly data Apr'13-Sep'17)
Highest return & lowest volatility
24
-5%
-3%
-1%
1%
3%
5%
Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17
Barclays EM USD Agg – TR in USD
MTD Price Return MTD Coupon Return MTD Currency Return
To hedge or not to hedge the currency
In USD
Effects of currency fluctuations can easily outweigh coupon and price returns
Source: Barclays Point, UBS AM. Data as of September 2017.
-5%
-3%
-1%
1%
3%
5%
Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17
Barclays EM USD Agg – TR in CHF unhedged
MTD Price Return MTD Coupon Return MTD Currency Return
Unhedged to CHF
25
6.0%
8.0%
10.0%
12.0%
In USD In CHF unhedged In CHF hedged to CHF
Volatility (Jan’00 – Sept’17)
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
In USD In CHF unhedged In CHF hedged to CHF
Return (Jan’00 – Sept’17)
The role of the exchange rate
No compensation for taking on the currency rate risk
Source: Barclays Point, UBS AM. Data as of September 2017.
Yields (Jan'00 – Sep'17) More return per unit of risk
0%
4%
8%
12%
16%
Jan-00 Mar-02 Jun-04 Aug-06 Nov-08 Feb-11 Apr-13 Jul-15 Sep-17
Barclays EM USD, in USD unhedged
Barclays EM USD, in CHF hedged
26
70
75
80
85
90
95
100
105
110
50
70
90
110
130
150
170
190
210
Dec-07 Sep-08 Jun-09 Mar-10 Dec-10 Sep-11 Jun-12 Mar-13 Dec-13 Sep-14 Jun-15 Mar-16 Dec-16 Sep-17
Index Performance
U.S. Dollar Index [RHS] JP Morgan EMBI Global Core JP Morgan EMLC Global Core
Emerging markt debt local currency
USD appreciation resulted in significant underperformance of local debt
Source: Bloomberg, JP Morgan, UBS AM. Data as of September 2017.
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Indexed emerging market debt - Key takeaways
The role of Emerging Market debt has substantially increased over the last 30 years, and representing 7% of the entire fixed income investible indexed exposure
Emerging market debt has shown superior risk-adjusted performance when compared other fixed income segments
Issuer diversification plays an important role as it enhances returns
Positioning at the shorter end of the curve provides better risk/return characteristics and higher liquidity
Currency hedging is key, as effects of currency fluctuations can easily outweight coupon and price returns
Fund name Fee AuM
(CHFm)
NAV
ccy
Replication Distribution ISIN Bloomberg
UBS ETF (LU) Barclays USD Emerging Markets Sovereign UCITS ETF 0.42%
245
USD Physical Yes LU1324516050 SBEM SW
UBS ETF (LU) Barclays USD Emerging Markets Sovereign h. CHF UCITS ETF 0.47% USD Physical No LU1324516720 SBEMS SW
UBS ETF (LU) Barclays USD Emerging Markets Sovereign h. EUR UCITS ETF 0.47% USD Physical No LU1324516308 SBEME SW
UBS ETF (LU) Barclays USD Emerging Markets Sovereign h. GBP UCITS ETF 0.47% USD Physical Yes LU1324516480 SBEMH SW
UBS ETF (LU) J.P. Morgan USD EM Diversified Bond 1-5 UCITS ETF 0.42% 50 USD Physical Yes LU1645385839 SHEMB SW
Source: UBS Asset Management. AuM as of 28 December 2017.
More to come soon: JP Morgan EM Local Currency Multifactor Enhanced
Concluding Remarks
Section 3
29
We work with our clients to understand their needs, objective and constraints
30+ years of passive experience incl. segregated mandates, pooled funds, ETFs
CHF 270bn of passive assets and CHF 50bn of assets in UBS ETFs
Ongoing developments within indexed solutions across asset classes
Market leading in:
Currency hedged framework
Alternative beta
Socially responsible investing
Enhanced commodity investing
Dedicated research teams (indexation, portfolio management, investibility research etc.)
Established relationships with leading index providers, active partner in research feedback loops
Summary
UBS Asset Management
Source: UBS Asset Management. Data as of December 2017.
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Innovative Core Fixed Income Innovative product offering on IG Corporate, Emerging Market Bonds and Inflation Linked
Product Quality: leadership areas and specialties
Core Equities Excellent replication quality and tracking difference thanks to competitive pricing and excellent portfolio management techniques.
Socially Responsible Investing
Factors Beta
Currency Hedged Market leader of currency hedged ETFs thanks to its range of products and extremely efficient share class system.
Commodities
Specialties Innovative and efficient special product areas: commodities indices, social responsible investments, smart beta and factor ETFs.
Source: UBS Asset Management. Data as of December 2017.
31
Contact information
Dominik Blunschi UBS AG Asset Management Director Passive & ETF Specialist Sales Switzerland & Liechtenstein Stockerstrasse 64 8002 Zurich, Switzerland Tel. +41-44-234 88 06 [email protected]
Raimund Müller, CIIA UBS AG Asset Management Executive Director Head Passive & ETF Specialist Sales Switzerland & Liechtenstein Stockerstrasse 64 8002 Zurich, Switzerland Tel. +41-44-234 39 81 Mobile +41-79-588 21 53 [email protected]
Adrian Steiner, CAIA UBS AG Asset Management Associate Director Passive & ETF Specialist Sales Switzerland & Liechtenstein Stockerstrasse 64 8002 Zurich, Switzerland Tel. +41-44-234 55 39 [email protected]
Giovanna Cilia UBS AG Asset Management Director Passive & ETF Specialist Sales Switzerland & Liechtenstein Stockerstrasse 64 8002 Zurich, Switzerland Tel. +41-44-234 53 68 [email protected]
32
Risk information
UBS ETFs investing in equities UBS Exchange Traded Funds invest in equities and may therefore be subject to high fluctuations in value. For this reason, an investment horizon of at least five years and corresponding risk tolerance and capacity are required. All investments are subject to market fluctuations. Every fund has specific risks, which can significantly increase under unusual market conditions. The fund’s assets are passively managed. As a result, the net asset value of the fund’s assets is directly dependent on the performance of the underlying equities. Losses that could be avoided via active management will not be offset. UBS ETFs investing in Real Estate Funds The funds invest in real estate funds under Swiss law that are denominated in CHF and invest exclusively in Swiss properties. The price of the underlying fund units is not determined by estimates of market value but by investor supply and demand. All investments are subject to market fluctuations. Every fund has specific risks, which may increase considerably in unusual market conditions. Please contact your client advisor if you wish to receive further information on the investment risks associated with this product. UBS ETFs investing in Metals The UBS Exchange Traded Fund investing in metals may be subject to considerable fluctuations in value. Investors therefore require an investment horizon of at least five years and corresponding risk tolerance and capacity. All investments are subject to market fluctuations. All funds have specific risks, which may significantly increase under unusual market conditions. The fund’s assets are passively managed. As a result, the net asset value of the fund’s assets is directly dependent on the performance of the underlying equities. Losses that could be avoided via active management will not be offset. UBS ETFs investing in Oil and Commodities The Fund delivers the returns of a broadly diversified commodity index and may therefore be subject to high fluctuations in value. For this reason, an investment horizon of at least five years and corresponding risk tolerance and capacity are required. The returns payable on the Fund are dependant on payments received by the Fund from the Swap Counterparty under the terms of the Relevant Swap and, therefore, are subject to the credit risk of the Swap Counterparty. In the event that the Swap Counterparty defaults under the terms of the Relevant Swap, the Fund may suffer a loss. Assets are passively managed meaning losses that could be avoided via active management will not be offset. The net asset value of the Fund’s assets are materially dependent on the performance of the underlying investments. In case the currency of the product is different from your reference currency, the return may
increase or decrease as a result of currency fluctuations. All investments are subject to market fluctuations. Every fund has specific risks, which can significantly increase under unusual market conditions. UBS ETFs investing in HFR The Fund delivers the returns of a broadly diversified hedge fund index and may therefore be subject to high fluctuations in value. For this reason, an investment horizon of at least five years and corresponding risk tolerance and capacity are required. The returns payable on the Fund are dependent on payments received by the Fund from the Swap Counterparty under the terms of the Relevant Swap and, therefore, are subject to the credit risk of the Swap Counterparty. In the event that the Swap Counterparty defaults under the terms of the Relevant Swap, the Fund may suffer a loss. Assets are passively managed meaning losses that could be avoided via active management will not be offset. The net asset value of the Fund’s assets are directly dependent on the performance of the underlying investments. In case the currency of the product is different from your reference currency, the return may increase or decrease as a result of currency fluctuations. UBS ETFs investing in Fixed Income This UBS Exchange Traded Fund invests in government bonds of a single country and may therefore be subject to fluctuations in value. For this reason, an investment horizon of at least five years and corresponding risk tolerance and capacity are required. All investments are subject to market fluctuations. Every fund has specific risks, which can significantly increase under unusual market conditions. As a result, the net asset value of the fund's assets is directly dependent on the performance of the underlying index. Losses that could be avoided via active management will not be offset. UBS ETFs investing in Multi Asset Portfolios The Fund is highly dynamic and may exhibit above-average potential growth and investment performance, depending on the economic environment. For this reason, an investment horizon of at least five years and corresponding risk tolerance and capacity are required. The Fund is exposed to the investment risk arising from the Reference Strategy underlying the Swaps. In the event that the swap counterparty defaults under the terms of the relevant swap, the Fund may suffer a loss. The Fund’s assets are passively managed. As a result, the net asset value of the Fund’s assets is materially dependent on the performance of the underlying investments. Losses that could be avoided via active management will not be offset. The Reference Strategy is a rules based Algorithm designed to target consistent returns but may not be effective in delivering such returns.
33
Disclaimer
For marketing and information purposes by UBS. For qualified investors only. The information and opinions contained in this document have been compiled or arrived at based upon information obtained from sources believed to be reliable and in good faith, but is not guaranteed as being accurate, nor is it a complete statement or summary of the securities, markets or developments referred to in the document. UBS AG and / or other members of the UBS Group may have a position in and may make a purchase and / or sale of any of the securities or other financial instruments mentioned in this document. UBS funds under Luxembourg and Irish law. The MSCI indexes are the exclusive property of MSCI INC. (“MSCI”). MSCI and the MSCI index names are service mark(s) of MSCI or its affiliates and have been licensed for use for certain purposes by UBS AG (“UBS”). 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