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September 7, 2021

UBS’ hedge fund weighs offering clients direct access to China strategy

By Verdict Staff

A hedge fund unit of UBS Group is reportedly mulling to offer its clients direct access to its China strategy, which registered double-digit growth this year.

At present, UBS clients can access the China strategy only through a $3.2bn multi-strategy investment pool provided by UBS O’Connor, the company’s New York-based hedge fund unit.

The China strategy recorded the ‘very positive’ returns in the last two months, UBS O’Connor unit chief investment officer Kevin Russell told Bloomberg but refused to divulge the precise numbers.

Russell did not reveal if the group is looking to set up a separate China fund, citing regulatory reasons.

However, he said that 13% of the unit’s gross assets comes from China and the country accounts for more than 15% of its ‘top decile’ return this year.

Russell told the news agency in a telephone interview: “Global investors continue to be underweight China.

“They continue to think that they need to be invested in China, because it’s very compelling from the growth and liquidity perspectives. But they are looking for safer ways, more conservative ways to invest in China.”

The news comes as the UBS group emerges out of a rough patch created by regulatory interventions that casted shadows on China’s investment prospects.

Russell added: “Despite the market being one of the worst performing markets in the world, despite some of the regulation and intervention surprising, there have been terrific opportunities for relative-value investors.”

He added that the firm’s previous plan to raise China investment to 18% fell apart due to a ‘slower-than-expected increase in the availability of A-shares’ for international investors to borrow.

Recently, UBS Global Wealth Management released its Multi Managers Access II – Future of Earth Fund.

The aim of the fund is to generate a compelling return by investing in companies addressing environmental issues and similar hurdles.

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