Open End PERLES on UBS RADA strategy indices

I. Paradigm shift at the exchange - the challenge

At the exchange, the crucial point is to do the right thing at the right time. In view of the severe price fluctuations due to the more frequent occurrence of crises since the beginning of the new millennium, the importance of such successful “timing” has increased significantly in recent years. Against this background, time-honored investment approaches such as the conventional “buy and hold” strategy are becoming more and more questionable. Therefore, new investment approaches are needed to accommodate this changed investment environment more effectively. Always making the right decisions is a major challenge even for people with long-standing experience and advanced market expertise.

II. Classical UBS RADA Strategy

The classical UBS RADA strategy does not merely invest in the respective underlying target index but, depending on the market phase, automatically decides whether to establish a long, short or cash position. While a long position assumes an upward trend of the underlying target index (positive equity market environment), a short position makes use of the downward trend of the underlying target index (negative equity market environment). A neutral cash position means staying clear of the equity market and investing in the money market. With the aid of the UBS DERI, the respective UBS RADA strategy index decides which position should currently be taken in the relevant target index. This indicator was developed by UBS Investment Bank Research, a unit that is independent from other UBS business areas, and measures the sentiment on the global financial markets every trading day.

III. UBS Global Emerging Markets (GEM) RADA Strategy-Index

In principle, the RADA strategy also functions with equities from emerging markets. These are countries engaged in a highly dynamic process of development into established, national economies. The UBS GEM RADA strategy basically follows the same logic as the classic RADA, however, there are important differences that need to be considered.

  • Opportunities & Risks