OREANDA-NEWS. Fitch Ratings has placed UBS (Lux) Equity SICAV - USA Growth SICAV (the fund) fund quality rating of 'Strong' Under Review. The fund is managed by UBS Asset Management.

KEY RATING DRIVERS

The fund has been placed Under Review as a result of its underperformance over the past six months. The fund ranked fifth quintile year to date through end of May 2016 in its U. S. equity Lipper category and U. S. Growth equity peer group. In addition, the fund, like most of its peers, has underperformed its growth-specific benchmark (Russell 1000 Growth NR) over five years, thereby failing to meet its objective of 3% relative outperformance.

Fitch expects to resolve the Under Review status after six months. The agency will closely monitor the fund's performance during this period to determine if its capacity to achieve its objectives and outperform peers has changed. Specifically, Fitch will assess whether performance issues are more stock-specific than process related.

Fitch will likely affirm the fund's 'Strong' rating if, at the end of the year, the fund's long-term performance is third quintile or better in its peer group. However, Fitch will consider a downgrade if the fund's short-term performance does not improve, leading to either long-term performance falling below Fitch's expectations for the 'Strong' category or to the agency revising its strong qualitative view of the fund's investment process.

The 'Strong' rating reflects the fund's highly documented investment approach, which is supported by in-depth research and portfolio management resources. In November 2015, Dan Neuger, a co-portfolio manager (PM), left the fund, and UBS returned to a single manager head structure with Peter Bye as lead PM. Bye has been with UBS since 2010 and was promoted to PM in 2012. The move to a single PM structure increases key person dependency on the lead PM, but this risk is mitigated by the consensual investment process and presence of senior sector specialist analysts.

The fund takes a straightforward, fundamental investment approach based on a benchmark unconstrained U. S. large-cap stock picking approach which seeks to outperform the Russell 1000 Growth index by 300bp per annum over the course of a full market cycle.

UBS Asset Management is a division of UBS AG ('A'/Outlook Positive/'F1'). UBS Asset Management managed USD653 billion in assets under management as of March 31, 2016.

RATING SENSITIVITIES

The rating may be sensitive to material changes in the investment or operational processes, or resources dedicated to the fund. A material adverse deviation from Fitch's guidelines for any key rating drivers could result in a downgrade of the rating. For example, this may be manifested in the departure of key investment professionals, notably the lead PM, or in significant deterioration in the fund's performance relative to its benchmark and peers.