Product Overview

In October 2002, the senior investment officers of UBS AG's Global Asset Management (GAM) division, the largest asset management firm in the world, must decide whether to issue a new quantitative investment product, one that will stand in sharp contrast to GAM's historically fundamentalist and value-style approach. The problem raises sharp questions about the strategic evolution of the industry, its products, and in particular, its leading firms. To some in the firm, it seemed that the new "quant" product was a natural extension of the strategic transformation of GAM since 1995. But others in the senior team wondered whether the market would be ready for this product. The tasks for the student are to map the industry changes, evaluate the transformation of UBS, and assess the fit of the new quant product with the firm's strategic approach. This case was prepared to meet the following teaching objectives: 1) Assess the pace, direction, and implications of globalization of the asset management industry. Key to this assessment is the emerging research on the relative importance of countries versus sectors in explaining investment returns globally; 2) Explore a "country/sector" organization structure for global research; Identify its defining characteristics. Compare it with other possible structures. Determine its advantages and disadvantages as an organizing system. Identify key success drivers. And 3) Evaluate a quantitative investment product relative to other product offerings. This case was prepared to meet the following teaching objectives: 1) Assess the pace, direction, and implications of globalization of the asset management industry. Key to this assessment is the emerging research on the relative importance of countries versus sectors in explaining investment returns globally. 2) Explore a "country/sector" organization structure for global research. a. Identify its defining characteristics. b. Compare it with other possible structures. c. Determine its advantages and disadvantages as an organizing system. d. Identify "key success drivers." 3) Evaluate a quantitative investment product relative to other product offerings.