UBS has launched model portfolios for its offshore clients that will be managed by the firm’s asset management arm on the back of advisor and client demand, Citywire Americas can reveal.
The new UBS Offshore Managed Portfolios are comprised of third-party managers selected by UBS Asset Management and use the wealth management firm’s house view and tactical asset allocation plans.
They were launched exclusively for the international clients of UBS Wealth Management USA’s booking centers in February after a year-long design and implementation process, according to Michael Belasco, head of wealth management distribution for the Americas at UBS Asset Management.
He said the firm aimed to create a ‘scalable and jurisdictionally efficient’ discretionary program to meet the needs of a very diverse and sophisticated international client base.
‘Our objective was to design a program that leverages the strength and expertise of our dedicated UBS Asset Management team as well as the intellectual capital of our CIO office,’ he added.
The portfolios are co-managed by Mabel Lung and Mark Price, portfolio managers at UBS Asset Management within the Investment Solutions team, which builds and manages different portfolio solutions to meet both global and regional clients’ needs.
The new vehicles are actively managed, multi-asset portfolios and are made up of 12 active mutual funds and nine ETFs. Clients can choose from three model portfolios depending on their risk appetite: conservative, moderate, or aggressive.
Belasco said: ‘The management team uses mutual funds to implement the strategic asset allocations of the UBS CIO WM - thus offering active mutual fund managers’ security selection alpha - and implements the UBS CIO WM’s tactical asset allocations primarily with ETFs.’
Depending on client demand, he said the firm will consider expanding the line-up of the offshore managed portfolios.
UBS Asset Management is also responsible for both ongoing research and due diligence of both the mutual funds and ETFs used in the portfolios.
The rise of the model portfolio
Model portfolios have become increasingly popular in wealth management as the industry moves toward more holistic, ‘goals-based’ planning than individual fund or stock picking.
‘Our advisors see leveraging UBS Offshore Managed Portfolios [OMP] as a great opportunity to deploy the full asset management and intellectual capital prowess of the firm to their clients,' said Belasco.
‘OMP's robustness and scalability addresses the clients' investment management and asset allocation needs while allowing advisors to focus on assisting their clients with their other needs and life goals.’
In the US, wirehouses have adopted model portfolios partly due to regulatory change but also because well-researched model portfolios generate better client outcomes than a transactional brokerage business could. UBS' offshore initiative shows this trend coming over to the offshore side.
Morgan Stanley also recently introduced offshore models to its international advisors in July 2017, which are managed in-house.