The UBS (Lux) Key Selection SICAV – China Allocation Opportunity Fund seeks capital growth and income by investing in a diversified mix of assets focusing on China.

The fund has been a robust performer in its relatively short life since a 2015 launch and impressed with its distinctive positioning and investment process. Firstly, it allows a one fund solution to capture both equity and fixed income investments in China, including onshore A-shares. Secondly, its active strategy to manage risk and performance was clearly explained using the recent US-China trade deal dispute example. The situation could lead to a binary deal or no deal outcome. An equity options strategy was put in place to manage either development, allowing the fund to participate in the subsequent rally when a trade deal was announced.

As part of UBS Group, there is comprehensive risk management and ESG integration process in place. However, it was noted that UBS SRI and ESG efforts are not run out of Asia, and integration is not yet throughout the group. Therefore, even though the ESG integration policies are solid with the parent company, it is not apparent the policies are implemented in Asia and across the asset management team. Engagement with companies and ongoing and necessary conversations with their target companies are required.

This strategy has been reviewed by four industry veterans of the Benchmark judging committee.