CHICAGO: The new head of global asset management in the Americas for UBS AG said on Wednesday, Oct 6 he is bullish on the outlook for U.S. equities, but warned that volatility will continue for the next three to five years.
In an exclusive interview with Reuters on the sidelines of a conference for some of the Swiss bank's U.S. institutional clients, Shawn Lytle said the challenge facing UBS's retail customers isn't that different from the one facing its institutional clients, many of which saw their pensions swing from surpluses to severe underfunding as a result of the market's losses.
"Whether you are a corporate, a public pension plan, a teachers plan, a government retirement plan, or an individual, you're underfunded," Lytle said.
"Their retirement was on track and they were doing well and then ... it's like a rocket has hit their portfolio."
But Lytle said that many of those retail investors have moved to fixed income products and passive management in the aftermath of the downturn, a move that inevitably translated into lower returns.
"We're still bullish on equities. We think equities will make progress," Lytle said. "We think they're undervalued relative to bonds definitely ... But the volatility that an investor will experience along the way for the next three to five years is going to be greater (than what they experienced in recent decades). So our investment strategies need to recognize that."
The challenge for UBS's investment management team, he said, will be to steer clients with fast-approaching retirement deadlines into products that offer "better returns than bonds but bond-like volatility."
"The average investor in our wealth management group is like 55 years or older," Lytle said.
"How do we ... get them the target return they need over time, particularly given bond yields are so low?"
He said the bank was focusing on market neutral hedge fund strategies, dynamic asset allocation strategies and other types of alternative investment approaches -- including both real estate and private equity.
"The types of investment strategies those clients need now ... are completely different than what they needed 10 years ago," Lytle said.
He said UBS asset management arm was "hiring aggressively in certain places" to build out its team of strategists, portfolio managers, analysts and sales staff.
Recent hires have included "two very senior people from Insight Management and Schroders" specializing in structured solutions who he said would be "joining us very soon."
"The hiring market is much more fluid now," he said. "It had frozen up for two years. Then in the last 12 months, it has opened up ... We're finding that the candidates we can select from now are even stronger than we could have three years ago," before the worldwide economic crisis.
Lytle, a managing director at UBS, was appointed head of the bank's global asset management in the Americas in April. - Reuters
In an exclusive interview with Reuters on the sidelines of a conference for some of the Swiss bank's U.S. institutional clients, Shawn Lytle said the challenge facing UBS's retail customers isn't that different from the one facing its institutional clients, many of which saw their pensions swing from surpluses to severe underfunding as a result of the market's losses.
"Whether you are a corporate, a public pension plan, a teachers plan, a government retirement plan, or an individual, you're underfunded," Lytle said.
"Their retirement was on track and they were doing well and then ... it's like a rocket has hit their portfolio."
But Lytle said that many of those retail investors have moved to fixed income products and passive management in the aftermath of the downturn, a move that inevitably translated into lower returns.
"We're still bullish on equities. We think equities will make progress," Lytle said. "We think they're undervalued relative to bonds definitely ... But the volatility that an investor will experience along the way for the next three to five years is going to be greater (than what they experienced in recent decades). So our investment strategies need to recognize that."
The challenge for UBS's investment management team, he said, will be to steer clients with fast-approaching retirement deadlines into products that offer "better returns than bonds but bond-like volatility."
"The average investor in our wealth management group is like 55 years or older," Lytle said.
"How do we ... get them the target return they need over time, particularly given bond yields are so low?"
He said the bank was focusing on market neutral hedge fund strategies, dynamic asset allocation strategies and other types of alternative investment approaches -- including both real estate and private equity.
"The types of investment strategies those clients need now ... are completely different than what they needed 10 years ago," Lytle said.
He said UBS asset management arm was "hiring aggressively in certain places" to build out its team of strategists, portfolio managers, analysts and sales staff.
Recent hires have included "two very senior people from Insight Management and Schroders" specializing in structured solutions who he said would be "joining us very soon."
"The hiring market is much more fluid now," he said. "It had frozen up for two years. Then in the last 12 months, it has opened up ... We're finding that the candidates we can select from now are even stronger than we could have three years ago," before the worldwide economic crisis.
Lytle, a managing director at UBS, was appointed head of the bank's global asset management in the Americas in April. - Reuters
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