Two new alternative beta passive OEICs have been launched by UBS Global Asset Management.
The first is the UBS FTSE RAFI Developed 1000 Index Fund and is benchmarked to the FTSE RAFI Developed 1000 QSR Index;
The second is the UBS MSCI World Minimum Volatility Index Fund and is benchmarked to the MSCI World Minimum Volatility GBP optimised Index.
UBS say that the funds have been launched on the back of client demand. They are currently available to institutional investors and, state UBS, some retail share classes might be issued in the near future.
In April 2014 UBS launched three UK Life Funds benchmarked to alternative beta indices. A further two were launched later that year.
Head of UK & Ireland at UBS Ian Barnes said: “Whilst market cap weighted indices have many advantages, including broad diversification and high liquidity, they do have a systematic flaw. This flaw may mean investors can end up holding more stock that is overvalued and less that is undervalued – the opposite of what many would see as most pragmatic.
“We are seeing more investors in the UK recognise the benefits that alternative beta strategies can bring to a portfolio. In many instances clients are opting for a combination of passive strategies, tracking both traditional and alternative indices to diversify exposure across several risk factors and drivers of returns.”