Where does investment management fit into the company structure at UBS?
UBS Global Asset Management is one of four autonomous divisions at UBS and accounts for around 10% of the company's overall profits. If you take the asset management side alone, however, we are amongst the largest global institutional managers, which means that we manage money for institutions such as wealth managers, pensions funds and similar organisations. We manage £355 billion in assets and have a staff of 3,800 spread across 27 countries" . In the UK we are one of the largest active managers and I am responsible for clients valued at around £5 billion. The money we manage typically comes from two sources - outside institutional investors such as pension funds and charities who account for around 60% of the assets we hold at any one time; private clients provide us with the rest (some of which are sourced through UBS's Wealth Management division).
What attracted you to working in the asset management industry rather than other areas such as investment banking or sales and trading?
The financial world was always something that interested me - I began buying stocks and shares (admittedly on an embarrassingly small scale) at school. At university I studied economics which was great in giving me an idea of the wider picture of finance and the economy. When I graduated it was just a case of turning this academic interest into an active interest. Asset management was a career that promised to satisfy my curiosity towards these areas, so it seemed like a natural fit.
What would you say are the main differences between working on the investment management side and another division within UBS, or any other bank for that matter?
It depends on which divisions you are comparing, but I think one of the main differences between working on the investment side and a banking division such as M&A is the way you interact with clients. Asset management is a people-focussed business. It is very client orientated so you will often have relationships with clients stretching back 20 or 30 years, in some cases even further - we have one client who has been with us since 1950, for example. The industry revolves around clients so the investment side is only really one part of the whole process. The clients are the ones who provide the money and your own income is derived from the fees you charge so you can never lose sight of the importance of the client. The key to running a successful asset management business is therefore to hang on to your customers through thick and thin. You generate new clients when the financial climate is favourable and you are able to make good returns on their investments and then persuade them to stay on board through the bad times. Investment banking is a much more transient in its approach. Everything is deal focussed so when you are finished on a particular project you move on very quickly to the next.
Another feature of investment management which attracted me to the industry above other areas is the wider focus this industry gives you. Deal-based work tends to be much narrower in its focus, you are tied to the project you are working on and don't really get a chance to see the bigger picture of what is going on around. Investing is about reacting to changes across different sectors and markets as well as the economy as a whole. It is constantly changing and evolving over time with the outside world which is why I suppose it has kept my interest for all these years - I haven't found myself getting bored of it yet!
What have been the main changes within the industry during your time in the profession?
There have a number of changes as you would expect over the course of 28 years. One of the biggest developments has been the way IT has shaped the industry. 28 years ago clients would give you money and tell you to go away and invest it wisely, there was no real impetus on them to compare the merits of different funds or to measure your returns against the market. Nowadays, in the internet age, there is so much information made available that everyone is extremely clued up and you have to work extra hard to beat your competitors and the market.
It has also become a global industry whereas 20 or 30 years ago it was incredibly difficult to invest abroad as exchange controls stood in the way of the whole process and did so up until the 1980s. It is only since then that international assets have played a prominent part in investment portfolios. There has also been huge growth in the area of alternative investments. Until recently, hedge funds were relatively unheard of products and, aside from a handful of pioneers, most companies considered them to be far too risky. They have become an increasingly important side of the industry as computer systems and risk management techniques have evolved to allow people to use them. As a result, we have seen a huge boom in alternative products such as hedge funds, private equity and venture capital over the last decade.
Obviously the financial crisis has had a damaging effect on the financial services industry as a whole. How has investment management been impacted?
Well, it really depends on how you look at it. The last 9 months have been extremely tough on our side of the industry as stock and bond markets have plummeted meaning returns have fallen sharply across the industry and with it the amount of money clients are willing to invest with institutions like ourselves. The flip side of this is that there are now unparalleled opportunities for the right people to take advantage of. The theme of the last few months with all the turbulence in the market is that share and corporate bond assets have sold down hard across practically all sectors as lots of investors have become chronically risk averse. Investors have sold out of company shares and debt and switched to investing in low risk assets like government bonds.
This doesn't mean you can't still make good returns, however. The key requirement for investment firms at the moment is they need to be much more nimble. With the degree of volatility in the market, company valuations are rising and falling 10 or 15% in a day so you need to be switched on the whole time and be ready to make the right decisions when they matter. Many firms, particularly the smaller boutiques of which there are many, have struggled to cope with the downturn as many clients have withdrawn their investments. A lot of these smaller firms will be forced to close or to merge so there will be a fair degree of consolidation in the industry and it may take a while for it to return to the level it was at a year or two ago. For the more resilient, particularly the larger firms like ourselves, however, there will be unprecedented buying opportunities going forward. Looking at the longer term, the price of equities have rarely been so low so provided you are willing to go against the trend and start buying when everyone is selling you stand to make great returns in the long-run. All in all, despite the uncertainty within the market at the moment, it is an incredibly exciting time to be in the investment profession. For those with the stomach for it, I would definitely recommend it.
[" All figures correct as of 30 September 2008]
UBS Global Asset Management currently has placement vacancies available to undergraduates. There are no full-time positions available at this time.