Bloomberg News reports that the bank increased the share of hedge funds in its global model portfolio to 20% from 18% as of April, after raising the allocation from 15% in 2015, Kelvin Tay, Singapore-based chief investment officer for Southern Asia-Pacific at UBS Wealth Management, said in an interview.
UBS, which managed $282bn of client assets in its wealth-management unit in the Asia-Pacific region year-end, cut the proportion of high-grade bonds by two percentage points to 11%.
The prospect of slowing growth in China and expectations of rising interest rates in the U.S. have sent global stock markets tumbling over the past year. Hedge funds haven’t been immune to the selloff, with the Eurekahedge Hedge Fund Index up 1.5% last year for the lowest return since 2011, and down 0.5% in the first quarter. Still, hedge funds, especially those that invest across multiple assets, have traditionally provided investors with protection in times of market dislocation and also offer better returns than bonds, UBS said.
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