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Philosophy
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UBPAM’s investment philosophy has remained the same since our inception: to construct diversified and optimized portfolios while extracting deep value opportunities from within the global marketplace. With a disciplined approach to portfolio management, UBPAM is committed to the constant management of risk and control of volatility. We seek to preserve capital through consistent, risk-adjusted returns that have low correlation to traditional asset classes. UBPAM’s strategy of top-down asset allocation and bottom-up manager selection is designed to strategically and geographically diversify risk-adjusted portfolios within various market conditions. This is accomplished by identifying, evaluating, selecting and monitoring top-tier hedge fund managers through our proprietary Qualitative and Quantitative Research, Structural Risk Analysis, and Portfolio Management processes. Portfolios are constructed to perform within a strict, predetermined risk budget. With these values at the core of our investment model, UBPAM is distinguished as a leader in the alternative asset management industry. Underlying Investment Strategies Non-Directional Arbitrage and Relative Value Convertible Arbitrage: Involves the simultaneous purchase of a convertible bond and corresponding short sale of the underlying equity. Managers within this strategy attempt to profit from the coupon income produced from the convertible bond and short rebate minus any financing costs and increased volatility which positively impacts the option embedded in the convertible bond. Trading around positions caused by equity market volatility is a major component of this strategy. Volatility Arbitrage: Focuses on identifying and exploiting implied volatility versus the actual volatility of identical or related securities. Managers trade in short term, liquid and mostly exchange listed financial securities and derivatives; therefore, returns are generated without the credit risk element inherent to conventional volatility trades (e.g., convertible arbitrage). Typically, managers use combinations of call and put options to create strangles and straddles to isolate volatility exposure. Index Arbitrage: Seeks to profit from pricing anomalies between actual and theoretical futures prices of a market index. This is done by buying (or selling) the futures contracts on an index while selling (or buying) the securities or portion of securities underlying index. Managers profit by a convergence of the two prices. Fixed Income Opportunities: Attempt to profit from pricing inefficiencies within fixed income markets or from relative value trading of interest rate or credit exposures. Strategies utilized are cash versus futures, yield curve anomalies and credit convergence trades in corporate and municipal bonds.
Value, Restructuring and Special Situations Event Driven Equity: Focuses on companies that are involved in a corporate reorganization, restructuring, bankruptcy, acquisition or complex regulatory situations. These strategies rely on corporate events not equity market direction, but perform best in a strong equity environment. Managers engaged in this strategy typically perform extensive research and analysis on companies identified as having deep unrecognized value and require change or external impetus to realize such value. Managers typically hold long equity positions and hedge general exposure through sophisticated and dynamic hedging positions. Event Driven Credit: Invests in companies that are entering a potential bankruptcy situation, are in bankruptcy or have a post-bankruptcy reorganization plan structured. Depending upon the manager’s style and focus, investments may be made in bank debt, senior debt, junior debt, trade claims, equities or warrants. Managers may also hedge market (interest rate and credit) exposure. Event Driven Multi-Strategy: Consists of managers who dynamically allocate capital to two or more event-driven strategies, which may include distressed, capital structure arbitrage, convertible arbitrage, merger arbitrage and other strategies (see above).
Opportunistic Opportunistic: Represents various funds that have historically achieved excellent, risk-adjusted returns with low correlation to traditional markets and other strategies. These managers focus on niche opportunities which are typically limited in size and in most situations have a longer duration to realization. Examples include inventory financing, middle market lending and real estate investing.
Directional Long/ Short Equity: Involves managers buying securities they believe will go up in price and selling short securities they believe will decline in price. Managers will be either "net long" or "net short" and have flexibility to change their "net" position frequently. The basic belief behind this strategy is that it will enhance the manager's stock picking ability and protect investors in all market conditions. Global Macro: Aims to identify price/valuation disparities in stock markets, interest rates, foreign exchange rates and physical commodities. To identify such disparities, managers generally employ a top-down global approach that concentrates on forecasting how global macroeconomic and political events affect the valuations of financial instruments. These approaches may be systematic trend following models or discretionary, and typically involve buying and selling cash, futures and option positions in these markets. Emerging Markets: Invests in securities issued by governments and companies from emerging or developing countries. Managers may utilize debt instruments, equity securities and derivatives instruments. Managers may focus on a particular developing country, a particular region or invest globally.
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