While this may not be the ideal market to launch a hedge fund, UBS is enjoying surprising success. UBS Global Asset Management has launched the U.S. Fundamental Equity Market Neutral fund, an equity long/short hedge fund.

The portfolio is market-, sector- and factor-neutral. It is broadly diversified, typically holding 100 to 150 long positions and 100 to 200 short positions. Since inception in March, the fund has reported a gain of 9.1%, according to public databases. 

“This is a fairly unique market-neutral strategy as all of the holdings in the portfolio are selected based on fundamental, not quantitative, analysis,” said Ian McIntosh, portfolio manager for the Systemic Alpha team. “We expect 85% or more of the portfolio’s active risk to come from security selection. We have minimized many of the factors used by quantitative managers, who comprise the vast majority of managers in this investment space.”

 The strategy offers monthly liquidity and has no lock-up period. It charges a 1% management fee and a 20% incentive fee.

UBS Global Asset Management manages some US$770 billion in traditional, alternative and real estate assets as of the end of March.