UBS Asset Management has created an in-house S&P 500 tracker for the firm’s wealth management arm to offer passive exposure at a tenth of the cost of the iShare ETF.
UBS Wealth Management had used the iShares S&P 500 ETF in its multi-asset portfolios, however it asked UBS Asset Management to build an in-house tracker that could do the same job at a fraction of the price.
The iShares ETF cost 0.4 per cent each year, while the new UBS tracker cost just four basis points.
The fund was seeded by UBS Wealth, which moved £450m from the iShares holding to the new passive fund in September.
UBS Wealth executive director James Mulford says the move is an example of the global financial services group’s ability to use its scale to secure better deals for its clients.
“We are an open architecture business, but we do take advantage of our firm’s breadth and scale,” he says.
“We couldn’t get that exposure – that liquid and that cheap – in the market so we created it ourselves.”
The new fund is a unit trust, rather than an ETF, but UBS believes intra-day dealing is not something that is helpful to a long-term investment vehicle like the multi-asset funds and portfolios it runs.
In August, UBS Wealth moved from the iShares FTSE 100 ETF to the Vanguard FTSE 100 ETF. The same month, Vanguard cut the fund’s charges by 1bp taking it 0.09 per cent.
The iShares equivalent cost 40bps, like the S&P product.