For many years, the bankвЂ™s funds had strong comes back and compensated dividends that are healthy. The Tax complimentary Puerto Rico Fund II, with $357 million in assets, includes a return that is five-year of per cent, based on UBS papers.
But as Puerto RicoвЂ™s woes that are economic deepened, UBS clients have observed the worthiness of these holdings fall. The fundвЂ™s stocks donвЂ™t trade for a trade, but UBS papers reveal it had a value that is per-share of6.16 at the beginning of September, down from $7.75 a share by the end of June. The fundвЂ™s value has dropped even more in present weeks, based on agents in your community.
Us shared funds have actually sharply paid off experience of the area in present months, based on the shared fund research company Morningstar. In current months, UBS and Wells Fargo had been among the list of banks that warned their agents to stay away from suggesting Puerto Rican financial obligation to consumers. UBS has told them they must affirm towards the bank they have warned customers who wish to buy Puerto Rican financial obligation about its dangers.
UBSвЂ™s dilemmas regarding the area have now been annoyed by the utilization of leverage, with respect to the lender as well as its consumers.
вЂњThe losings may be, and often are, really quick, particularly when thereвЂ™s limited or no liquidity,вЂќ Mr. Mullholland reminded agents month that is last.
The funds UBS manages are by themselves extremely leveraged. As an example, the Tax complimentary Puerto Rico Fund II includes a leverage ratio of 53 per cent, meaning for virtually any buck of consumer assets it holds, it’s approximately another buck of assets purchased with lent cash.