According to a press release, the fund seeks returns with low correlation to traditional equity and fixed income markets. It seeks to outperform 3-month LIBOR by 3%, net of fund ordinary operating expenses, over rolling five-year time horizons.
The fund offers less reliance on favorable markets for positive client outcomes; the flexibility to invest opportunistically across regions, markets and sectors; and the ability to take both long and short positions to manage risk exposures. It employs a structured investment process combining a top-down global strategy, along with fundamental bottom-up analysis that seeks to generate returns.
“One key advantage of the Fund is that it is unconstrained by a benchmark, unlike traditional bond funds, and it can adjust its duration to be either positive or negative, based on the investment team’s outlook for the direction of interest rates,” said Brian Fehrenbach, Head of Fixed Income Derivative Strategy, in the announcement.According to UBS, the fund is an alternative strategy for investors who seek less reliance on favorable equity and fixed income markets, or it can be a substitute for a portion of a portfolio’s fixed income component for investors who are concerned about the possibility of rising interest rates, or want a fixed income portfolio with more flexibility than a traditional fixed income portfolio.