Fund Rationale: UBS US Total Yield Fund

UBS US Total Yield Fund (the “Fund”)
SGD Hedged Class P Monthly Distribution Shares (ISIN: LU1257167418)
Fund Manager Page
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Endowus has selected the Fund for its:

  • Unique investment objective that focuses on delivering above market average total yield whilst not compromising on quality (total yield is the sum of yields from dividend distributions and from company profits returned to shareholders via share buybacks);
  • Rules-based system in stock selection and portfolio construction that helps to reduce behavioural bias in investing, a common pitfall that investors face;
  • Experienced portfolio management team  with an average of 21 years of industry experience; and
  • Retail share class with 100% trailer fee rebated back to Endowus investors to achieve lower cost of access.

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Key Information

Fund Objective: Invests in selected US companies that are expected to deliver above-market average total yields by focusing on quality factors with the aim to exclude low quality stocks, with low single stock weights and broad sector allocation.

Suitability: Investors who aim to generate strong capital appreciation with a reasonable level of income while giving due consideration to capital security and liquidity, want to invest in a diversified equity portfolio, are prepared to assume the risks associated with investments in equities, and are comfortable that investments of the Fund may be subject to substantial fluctuations.

Cost:
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  1. Total Fund-level Fees include fund management fee of 1.24%.
  2. This is a retail share class with 100% trailer fee rebated back to Endowus investors to lower the cost of access.
  3. Endowus does not charge a preliminary sales charge or any other additional fees, other than the all-in Endowus Access Fee.

Fund Characteristics

Fund Inception: 15 February 2015
Share Class Inception: 24 February 2017
Benchmark: MSCI USA 

Fund AUM: SGD 915m
Source: MorningStar as of 23 July 2021. Please refer to the FMC page for the most updated AUM.

Regional Allocation:

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Sector Allocation:
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Source: MorningStar as of 31 May 2021. Allocation data indicate actual exposure as a percentage of the Fund's total Net Asset Value. Please refer to the Fund Manager Page for the most updated information on Fund Holdings and Breakdown. 

Selection Criteria

Endowus has selected the Fund for its unique investment objective that is well differentiated from its peers. The Fund focuses on total yield, which is the sum of yields from dividend distributions and from company profits returned to shareholders via share buybacks. The Fund employs a quantitative investment process driven by a rules-based system managed by the UBS Quantitative Investments team and supported by UBS’ proprietary Portfolio Optimiser (“POP”) which plays a key role in portfolio construction. 

All ideas in the investable universe are ranked according to a predefined criteria with an emphasis on both high quality and high yield, with greater weightage on the former to avoid falling into value traps. POP then integrates these rankings with risk metrics, transaction cost information as well as client specific constraints to generate a portfolio that is aligned to the Fund’s investment objective, to deliver above market average total yield whilst not compromising on quality. 

The resultant portfolio is one that is well-diversified across sectors and with approximately 100 holdings which are equally weighted, and is consistent with its screening criteria which takes factors such as price stability, dividend yield, profitability metrics, balance sheet quality and select ESG scores into account. The Fund’s systematic rules based investment process allows for reduced behavioural bias in investing, which is a common pitfall that investors face. 

We also like that the PM team is  experienced with an average of 21 years in the investments space. Both Jeremy Raccio (Lead PM) and Masafumi Sasai (Deputy PM) are long-time quant analysts turned portfolio managers, and are supported by a team of equity specialists and research analysts. The PM team constantly monitors, updates and maintains the POP system, working closely with the Information Technology Department  in implementing improvements. 

Since inception in 2013, the fund has consistently delivered an average of 6-8% annualised dividend yield while preserving capital. The Fund is tilted towards quality, value and mid-cap, and would only outperform if such styles outperform. Given this, investors should consider diversifying their investment with  a mix of other funds that have differing factor exposures to shield against rotations in the market.

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Updated by Endowus: July 2021

** Disclaimer: Past performance should not be taken as an indication or guarantee of future performance and no representation or warranty, express or implied, is made regarding future performance. Any opinions expressed reflect a judgment at the original date of publication by us and are subject to change without notice.
The prospectus, profile statement, product highlight sheet, fund factsheet or other offer or product documents may contain references about the expected risk tolerance of their target investors. These are in no way indicative of how we at Endowus have assessed your risk tolerance based on your stated objectives and financial situation. Endowus accepts no responsibility for investment decisions made in response to the expected risk tolerance levels mentioned in the product or offer documents.