Commenting on the move, fundweb quoted Neil Cumming, who co-manges the PSigma Income fund with Bill Mott and Eric Moore as saying: "We have bought 0.5% in UBS as we see through the restructuring of the bank it will become more of a wealth manager. They have a lot of capital tied up in the investment banking operation and, as they wind up various activities, they will have more capital which will improve the return on equity."
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"At the moment UBS is not a big yielder (1-1.5%) but in the last dividend announcement it put the dividend up 50% and we see the dividend growth going up. [It] could take it up to 4-5%, which will push the share price up," Cumming added.
He further explained that banks have had a difficult period and now face greater regulatory scrutiny.
Additionally, the PSigma Income fund also owns HSBC and Barclays but runs underweight positions. And it does not hold Standard Chartered, which looks fully valued.
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