UBS Hedge Fund Solutions LLC

Last Updated: 12/3/2020

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UBS Hedge Fund Solutions LLC is a Limited Liability Company that started in 2004 and is primarily owned and controlled by UBS Asset Management and its global affiliates.

UBS Hedge Fund Solutions offers investment advisory services regarding investment in privately placed pooled investment vehicles. HFS provides discretionary investment management services to a variety of investment vehicles, some of which are and others which are not registered under the Investment Company Act of 1940, as amended (the “Investment Company Act”), as well as institutional and ultra-high net worth investors. Additionally, HFS provides advisory services to affiliated entities, institutional entities, intermediary firms, family offices, and ultra-high net worth investors.

UBS Hedge Fund Solutions LLC operates out of an office in Stamford, CT. Based on the Form ADV filed on 2020-03-30 00:00:00, the investment firm is comprised of 105 employees, only 63 of whom performs investment advisory functions.

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Fact Sheet

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Investment Strategy

According to the brochure submitted to IAPD, UBS Hedge Fund Solutionss investment strategy is as follows:

HFS employs a number of investment strategies in connection with investment management services it provides to its clients. HFS’s clients should carefully read the relevant offering memorandum or negotiated advisory agreements for specific information applicable to that investment to ensure that the investment is appropriate considering, among other considerations, their own investment objectives, risk tolerance, and time horizons. When managing funds and accounts, HFS will principally use one or more of the following strategies:

Equity Hedged:

Equity Hedged managers generally use fundamental analysis to invest in publicly traded equities and seek to generate alpha through superior security selection. Portfolio construction is driven primarily by bottom-up fundamental research; top-town analysis may also be applied. substrategies include: Fundamental, Equity Event, and Opportunistic Trading.

HFS implements a direct trading strategy:

HFS allocates a portion of the fund's assets to one or more portfolio funds for which HFS implements a direct trading strategy as a sub-manager.

Direct investing within Equity Hedged:

One of the direct trading sub-strategies is the 13F strategy and commenced trading in June 2017. The objective of the 13F strategy is to trade a securities portfolio that replicates the aggregate performance characteristics of a portfolio of equity securities held by a select number of submanagers which have listed them on their respective filings under SEC Form 13F. HFS will not receive any compensation with respect to investments in portfolio funds for which HFS implements the 13F strategy. In implementing this 13F strategy, HFS will first define the universe of sub-managers, employing various investment approaches within the Equity Hedged strategy sector, and then utilize quantitative selection methodologies to analyze a number of factors, including, but not limited to, the sub-managers’ historical performance, their historical levels of alpha generation and various portfolio characteristics (for example, market capitalization, style, crowding, factor exposure, portfolio concentration, and turnover) to derive a subset of sub-managers whose aggregate performance characteristics HFS will seek to replicate. This subset of sub-managers may also be further analyzed for a number of qualitative factors selected by HFS.

Once the relevant subset of sub-managers has been identified, HFS will use a rules-based selection methodology to derive a long portfolio of US-listed equities from the sub-managers’ holdings as disclosed in their respective regulatory filings with the SEC. Position sizing will vary and will generally be based on a proprietary weighting methodology. To create the hedged exposure and to achieve certain performance characteristic targets, HFS will employ a third party’s portfolio optimization services, utilizing selection criteria identified by HFS, to generate a portfolio of short positions, complementary to the long portfolio derived by UBS Hedge Fund Solution LLC, to be added to the direct trading portfolio.

On a periodic basis, HFS rebalances the 13F strategy portfolio and may elect to add or remove positions, or adjust gross and net exposures in accordance with predetermined beta and volatility targets, or adjust the portfolio in response to current market conditions or to express a sector or style bias, by adjusting the portfolio parameters of HFS's rule-based selection methodology. From time to time, sub-managers may be removed from, or new sub-managers added to, the universe of sub-managers included within the 13F strategy.

With respect to its 13F strategy, HFS currently accesses market exposure through one or more swap contracts entered into with one or more major financial institutions rather than directly through the purchase and sale of securities, although HFS may trade securities directly if it determines that doing so is more efficient than accessing market exposure through swaps.

Other Direct Trading:

HFS may pursue a number of different categories of trades as a sub-manager, including with respect to the categories listed below, although there can be no certainty that any particular category of trade will be effected at any particular time or that HFS will, or will not, effect multiple trades in several categories essentially simultaneously. HFS may pursue additional categories, or sub-categories, of trades at any time in the future. HFS initiated trades may be effected directly or indirectly, through synthetic instruments, depending on HFS's views as to the most optimal trade construction.

Trading:

Trading strategies are generally top-down in nature and often driven by economic and macroeconomic research. These strategies may utilize financial instruments, such as foreign exchange, equities, rates, sovereign debt, currencies, and commodities to express a manager’s view. In executing different approaches, managers may use either fundamental or quantitative models or a combination of both. Sub-strategies include: Systematic, Discretionary (previously known as Global Macro) and Commodities.

Relative Value:

Relative Value is a broad category, generally encompassing strategies that are non-directional and often quantitatively driven. Managers in this strategy typically use arbitrage to exploit mispricings and other opportunities in various asset classes, geographies, and time horizons. Managers frequently focus on capturing the spread between two assets, while maintaining neutrality to other factors, for example to geography, changes in interest rates, equity market movement, and currencies, to name a few examples. Sub-strategies include: Fixed Income Relative Value, Agency MBS, Quantitative Equity, Cap Structure/Vol Arb, and Merger Arbitrage.

Credit/Income:

In Credit/Income strategies, managers utilize credit analysis to evaluate potential investments and use debt or debt-linked instruments to execute their investment theses. Their approach can be either fundamental, quantitative, or a combination of both. Sub-strategies include: Distressed, Corporate Long/Short, Asset-Backed (previously known as Structured Products), Reinsurance/insurance linked Securities (“ILS”) (previously known as Reinsurance), collateralized loan obligation (“CLO”)/Corporate Lending (part of Structured Products prior to January 2016), and Other Income (previously known as Other).

Other:

This category contains investment approaches that are outside of the mainstream hedge fund strategies (Equity Hedged, Credit/Income, Relative Value, and Trading). The category includes niche investment approaches. Money Market funds and cash strategies are also included in this category, as are Liquidating/Side Pockets.

Risk Parity:

Risk Parity generally focuses on the passive allocation of risk, rather than of capital, in an attempt to provide a higher Sharpe ratio alternative to the traditional 60% stock / 40% bond portfolio through the use of a wider range of uncorrelated assets, low leverage, and low equity risk. Please note, while an alternative to traditional asset allocation, Risk Parity is not a hedge fund Strategy.

Risk Premia: Risk Premia are passive investment strategies implemented systematically via a rules-based approach. In general, managers seek to capture return streams generated by various identifiable market factors across a variety of asset classes (equities, credit, fixed income, currencies, and commodities) and styles. Managers generally do not charge incentive fees on Risk Premia because they are considered an “alternative beta” as opposed to an “alpha” strategy. Substrategies (Styles) within Risk Premia includes: Momentum, Carry, Value, Quality, Liquidity, Event, Hedging, and Multi-Premia.

Private Credit

Private Credit strategies encompass opportunities across a broad array of sectors within the debt markets (for example, Residential Real Estate, Commercial Real Estate, Corporate Credit, Collateralized Loan Obligations, and Asset Backed). Managers generally apply in-depth fundamental credit, capital structure, and event analysis to individual investment opportunities. The strategy is frequently accessed through drawdown structures, similar to Private Equity vehicles. Sub-strategies include: Performing and Distressed.

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Methods of Analysis

In addition, UBS Hedge Fund Solutionss methods of analysis include:

From a top-down perspective, our goal is to build robust hedge fund portfolios seeking to (i) preserve capital and (ii) generating positive risk adjusted returns across varying capital market environments and macroeconomic regimes. In order to do so, we believe it is essential to have a deep understanding of the drivers of risk and return, as well as a command of the broader capital markets. Understanding a strategy’s source of alpha (be it idiosyncratic, carry/yield, liquidity driven and/or directional in nature) as well as the causal factors behind how various strategies perform and correlate to each other and to the markets in varying economic environments, is key to constructing robust hedge fund portfolios.

From a bottom-up perspective, the manager selection process is forward-looking, and an emphasis is placed on the qualitative attributes of successful managers rather than simply on their historical track records. A combination of onsite and offsite due diligence is conducted to ascertain a manager’s investment acumen under varying market conditions as well as the manager’s ability to run an investment business. The due diligence is designed to evaluate the manager’s investment methodology and execution, portfolio management and risk control, and operations and infrastructure. The goal is to identify the differentiating factors that give the manager a sustainable investment edge in seeking to generate superior risk-adjusted returns over time.

Investment research is organized by “Strategy Teams” based on specialist knowledge / skill sets. Each Strategy Team has two core responsibilities: (i) manager research / monitoring and (ii) strategy research. Strategy Team research is a key input for the portfolio management process. Responsibilities are delegated by skill set and seniority.

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UBS Hedge Fund Solutions LLC does not have a Form 13F in our records