CHICAGO — UBS Global Asset Management created the U.S. Equity Alpha Strategy, the third new alpha-generating strategy the $571 billion asset management firm has launched this year. The new strategy, an extension of the firm's existing fundamental equity offerings, allows the equity team to short securities within a long-only portfolio while assuming the same risk levels inherent within a traditional long-only portfolio, said Kai Sotorp, head of UBS Global Asset Management for the Americas. It seeks to outperform the Russell 1000 index by 300 to 500 basis points and will generally invest in 75 to 125 stocks, adding alpha by taking up to 40% in short positions.
The company launched the new strategy in early December in response to institutional investors' increasing demand for alpha-generating strategies, said John Leonard, head of UBS Global Asset Management's North American equities team. The strategy can be positioned as a core equity substitute, he added.
Earlier this year, UBS Global Asset Management introduced two other alpha-generating strategies, the absolute return Dynamic Alpha Strategy and the Absolute Return Bond strategy. All three now have a total of about $8 billion in assets under management. The new Equity Alpha Strategy has $170 million in assets under management.
Over the next 12 to 18 months, UBS Global Asset Management will likely launch a global equity alpha strategy, as well as Asian and European equity alpha strategies, Mr. Leonard said.