Mixing quality and quantity: UBS and fund selection

The head of UBS's fund selection for Asia discusses how the Swiss bank combines qualitative fund analysis with quantitative performance to hone in on preferred products.
Mixing quality and quantity: UBS and fund selection

Jansen Phee is the head of fund management for Asia Pacific at UBS Wealth Management, responsible for its fund offerings in the region. The Singapore-based specialist chairs UBS’s Asia Pacific funds committee and is also a member of its global funds committee. 

Phee previously headed UBS’s discretionary fixed income and equity teams and the head of the domestic investment specialist team where he helped advise and structure investment solutions for clients. He has over 15 years of experience in investment advisory, discretionary management and research roles.

He explained to AsianInvestor the importance of using qualitative criteria over quantitative methods in assessing the suitability of funds.

Q What is your fund selection process?

As a philosophy, our selection process is focused on qualitative analysis rather than pure quantitative performance. 

To be able to choose consistently outperforming funds, we have a four-factor selection process, which involves looking at the fund house, its people, investment philosophy and processes. It focuses more on quantitative assessments, which is more important that simply looking at performance-related analyses. We send out a detailed questionnaire as a request for proposal to fund houses that cover both qualitative and quantitative factors.

For example, the quality of the investment manager and analysts that a fund house hires is very important to us. We also look at the incentive structure of the fund house as an important qualitative selection criterion. The ability to retain talent by providing appropriate incentives to analysts and fund managers to do their best is highly important. 

Other qualitative assessments include understanding their entire investment process, their risk management guidelines, compliance requirements as well as the liquidity analysis of their underlying markets.

If we are dealing with a new fund house, we definitely make it a point to meet the fund managers and key analysts face to face to determine their capabilities and experience. We will also review the systems they use to understand how they execute their trades and implement their ideas.

After we are satisfied with our qualitative assessment, we conduct our quantitative analysis to confirm our qualitative analysis findings.

It can take up to two months or more to complete the due diligence process.

Once that is done, our analysts present their findings in a written report to the Asia funds committee or the Global funds committee. These committees continuously monitor the approved funds and remove them when appropriate.

Q How many funds do you have and how frequently do you update the funds list?

Our master list, which consists of all approved funds, totals around 600, and is updated every month. We also have a focus list consisting of a handful of funds that represent our strongest conviction—these also represent the chief investment office’s (CIO) current views.

We have a monthly call with all our analysts where we go through the qualitative and quantitative aspects of all our approved funds. 

We have fund analysts in key locations—Zurich, London, Singapore and Hong Kong—because we believe that having analysts with local knowledge makes a big difference in selecting funds that represent a particular region well.

Look out for the second part of this Q&A interview, taken from AsianInvestor's April/May 2018 magazine, in which Phee discusses what it takes to remove funds from his fund list. 

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