why ubs tactical beta funds?

Not for retail clients

July 2014

Why UBS Tactical Beta Funds? Because the journey matters

Global Asset Management

NOT FOR PUBLIC USE. NOT TO BE MAILED, SHOWN OR QUOTED TO ANY THIRD PARTY. THIS PRESENTATION IS SUBJECT TO THE ENCLOSED DISCLAIMER.

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The way forward for clients portfolios

A smooth journey

Sleep at night

Proven Performer

Cost management

• The journey matters as much as the destination • Clients care more about limiting losses and liquidity • Focus on risk management

• Benchmarks is where the journey starts • Stability of returns • Active Asset Allocation to avoid the pot holes

• Use experts to reduce stress and help make decisions • Look for demonstrated track record • Global Strength to reduce cost and best capture opportunities

• Reduce cost through passive building blocks • Combining components into solutions with single manager • Passive alone may not give investors outcomes they desire

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US real GDP growth and volatility

Data as of 31 December 2011 Source: UBS Global Asset management, US Department of Commerce: Bureau of Economic Analysis

Great Moderation

High Volatility = Tactical AA Low Volatility = Strategic AA

The return to volatility, requires active asset allocation The end of the 'Great Moderation' has seen the rise of volatility in markets

……active asset allocation to smooth the ride

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Note: UBS Global Asset Management GIS professionals contributing to multi-asset portfolios as of July 31, 2013

Tom Rivers Portfolio Manager London

Keiko Kondo Head of Multi-Asset Asia-Pacific

Stefan Lecher Strategist Hong Kong

Tracey McNaughton Head of Investment Strategy Sydney

Curt Custard Head of GIS Chicago

Why UBS? We don't rest, so you can sleep at night Large team: Harnessing global strength for local investors

…. a proven track record

100 Investment Professionals 30 years of AA 8 time zones

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Directional vs

relative Time horizon

Economic scenarios

Asset class Country Sector

Region Theme Instrument

Managing the journey is as important as the destination

… so our investors can sleep at night

Actively manage risk to avoid the pot holes

Smooth returns through diversification

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Tactical Beta Funds: Passive foundation, active overlay

Benchmark: Start with either a conservative, balanced or growth portfolio of passive pooled funds and ETFs to match your time horizon and risk tolerance

Asset allocation: Determine where we are in the cycle and where we are heading

Tactical asset allocation: Allocate to the appropriate mix of assets that will provide superior risk-adjusted returns

Equities 50%

Fixed income 45%

Commodities 5%

Recovery Expansion Slowdown Recession

Equities 50%

Fixed income 45%

Commodities 5%

China

US Europe Japan

…. passive building blocks for low cost & stability of return

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UBS Tactical Beta Fund – Strategy Outline

Asset Allocation - Balanced

Asset

Allocation Limits

Strategic Weights

Tactical Weights

INCOME ASSETS

Cash 0-30 4.0% 16.1%

Australian Government Bonds

10-70

14.0% 14.0%

International Government Bonds

18.0% -0.8%

Investment Grade Credit 0-35 9.0% 4.9%

High Yield Credit 0-10 3.0% 7.1%

Emerging Market Debt 0-10 2.0% 5.0%

TOTAL 25-75 50.0% 46.3%

GROWTH ASSETS

Property securities 0-13 4.0% 4.1%

Australian Equities 8-45 23.0% 19.4%

International Equities 8-60 23.0% 30.2%

TOTAL 25-75 50.0% 53.7%

Alternative Strategies 0-10 0.0% 0.0%

Foreign Currency Exposure 0-25 0.0% 2.0%

*May exceed upper limit of this range for extended periods due to market movements or significant cash flows.

Source: UBS Global Asset Management. As at 30 June 2014

Strategy Outline: The objective is to provide a total return in excess of the benchmark over a full investment cycle

-5% 0% 5% 10% 15% 20% 25% 30% 35%

Cash

Australian Government Bonds

International Government Bonds

Investment Grade Credit

High Yield Credit

Emerging Market Debt

Property securities

Australian Equities

International Equities

Foreign Currency Exposure

Strategic Weights Tactical Weights

Fund

SAA Benchmark (Defensive % / Growth %)

Long-term Characteristics %pa

Investment Horizon MER Distributions

Conservative 70% / 30% CPI plus 4.5 3-5 years 35 bps Qtr

Balanced 50% / 50% CPI plus 5 3-5 years 35 bps Qtr

Growth 30% / 70% CPI plus 6 3-5 years 35 bps Qtr

Tactical Weights - Balanced

…. benchmarks to suit the journey

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Tactical Beta Fund - Balanced

Historical market exposure

Source: UBS Global Asset Management Performance figures are net of ongoing fees and expenses.

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Growth Aus EQ Growth Int'l EQ Growth Prop

Income Gov't Bond Income IG Income HY

Income EMD Income Cash Growth Total

Income Total

Performance as at 31 July 2014 1 Mth

% 3 Mth

% 6 Mths

% 1 Year

% 2 Years

% pa

Since Inception*

% pa

Tactical Beta Fund - Balanced 1.12 3.20 6.97 11.59 - 12.89

Neutral** 1.16 3.12 7.30 11.90 - 12.10

Added Value (0.04) 0.08 (0.33) (0.31) - 0.79

Graph shows data since 31 December 2012 Inception of fund 12 October 2012

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Tactical Beta Balanced

Benchmark

CPI + 5%

Since Inception: Gross Returns 13.29% pa Benchmark 12.10% pa Actual Volatility 4.60% pa

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Tactical Beta Fund - Conservative


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4Growth Aus EQ Growth Int'l EQ Growth PropIncome Gov't Bond Income IG Income HYIncome EMD Income Cash Growth TotalIncome Total


% 3 Mth

% 6 Mths

% 1 Year

% 2 Years

% pa

Since Inception*

% pa

Tactical Beta Fund - Conservative 0.92 2.93 5.64 9.57 10.73 10.24

Neutral** 0.88 2.78 6.08 9.99 9.84 9.91

Added Value 0.04 0.15 (0.44) (0.42) 0.89 0.33

Graph shows data since 30 June 2012 Inception of fund 14 May 2012


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Tactical Beta Conservative

Benchmark

CPI + 4.5%


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Tactical Beta Fund - Growth


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Growth Aus EQ Growth Int'l EQ Growth Prop Income Gov't Bond

Income IG Income HY Income EMD Income Cash

Growth Total Income Total


% 3 Mth

% 6 Mths

% 1 Year

% 2 Years

% pa

Since Inception*

% pa

Tactical Beta Fund - Growth 1.24 3.55 8.36 13.41 16.10 15.33

Neutral** 1.36 3.47 8.59 14.00 15.98 15.41

Added Value (0.12) 0.08 (0.23) (0.59) 0.12 (0.08)

Graph shows data since 30 June 2012 Inception of fund 14 May 2012


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Tactical Beta Growth

Benchmark

CPI + 6%


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Scalable Advice Models – Core & Satellite

Fund Low Balance Medium Balance High Balance

Core UBS Tactical Beta UBS Tactical Beta UBS Tactical Beta

Satellite None Active Managers Direct

Solution Single Fund Core plus Multi Manager Fund or

Active Funds Core plus bespoke Direct Options

.… TAA through a passive, low cost & nimble core

Core – AA Tactical Tactical Tactical

Satellite - AA None Strategic Tactical

Core – UBS TBF

Satellite – Managed Fund

Satellite – Direct

Shares Property

Bonds/ Deposits

Satellite – None

Core - Beta Core - Beta

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Disclaimer

This presentation and accompanying documents is intended to provide general information only and has been prepared by UBS Global Asset Management (Australia) Ltd (ABN 31 003 146 290) (AFS Licence No. 222605) without taking into account any particular person’s objectives, financial situation or needs. Investors should before acting on the information provided in this presentation, consider the appropriateness of the information having regard to their personal objectives, financial situation or needs.

Any opinions expressed in this material are those of UBS Global Asset Management (Australia) Ltd, a member of the Global Asset Management division of UBS AG, and are subject to change without notice. Although all information in this presentation and documents is obtained in good faith from sources believed to be reliable no representation of warranty, express or implied is made as to its accuracy or completeness. Neither UBS AG nor any of its affiliates, directors, employees or agents accepts any liability for any loss or damage arising out of the use of all or any part of this material.

The information provided during this presentation must not be relied on to make an investment decision. It is not an offer or recommendation to acquire an interest in the UBS Managed Investment Funds (UBS Funds) or recommendation to purchase or sell any particular security. Offers of interests in the UBS Funds are contained in the relevant current Product Disclosure Statement (PDS). An investment in any of the UBS Funds does not represent deposits or other liabilities of UBS AG or any other member company of the UBS Group. Your investment is subject to investment risk, including possible delays in repayment and loss of income and capital invested. The repayment of capital or income is not guaranteed by any company in the UBS Group.

Performance can be volatile and future returns can vary from past returns. Up-to-date performance information can be obtained by contacting UBS Global Asset Management (Australia) Ltd. A copy of the PDS is available from UBS Global Asset Management (Australia) Ltd, the issuer of the UBS Funds, on (02) 9324 3222 or freecall on 1800 023 043. You should consider that PDS and obtain professional advice before making any decision about whether to acquire or continue to hold an investment in the Fund(s).

This document may not be reproduced or copies circulated without prior authority from UBS Global Asset Management (Australia) Ltd.

© UBS 2014. The key symbol and UBS are among the registered and unregistered trademarks of UBS. All rights reserved.

why ubs tactical beta funds?

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