UBB Asset Management

The risk, relating to investment in financial assets is the possibility that the achieved return of a certain investment may be different from the expected return. It is commonly accepted that the risk is the probability to realize a loss from holding some or even all investments.

“UBB Premium Equity Fund”’s resources are invested in assets bearing medium to high risk rate for the investors and maintains asset structure in comformity with the restrictions, imposed by the Fund’s Regulations, POSA and the sub delegated legislation on its application.

Managing “UBB Premium Equity Fund”’s portfolio and dealing actively risk management, Management Company observe and analyse all kinds factors, which can affect to the funds return. The main risks are widely described in the Risk Management Rules.

According to the methodology approved by the Bulgarian Association Management Companies, as a measure for the risk is accepted the index “standard deviation”. The more great values, the more risky investment. Standard Deviation is calculated on the weekly base of data for NAV/ 1 unit for the last calendar year after which it is annualized.

Standard deviation for NAV/1 unit of UBB Premium Equity Fund (annual)

Risk measures	31.01.2012
Standard deviation (σ)	11.72 %
Beta coefficient (β)	0.47
Sharpе ratio	- 1.20
Tracking error	12.28 %

Standard deviation (σ) – an universally perceived measure of the risk. A high standard deviation indicates that the investment is riskier. It is calculated on daily data of NAV/1 unit for the last calendar year and than annualized.

Beta coefficient (β) – describes how the return of an investment is correlated to the return of the capital market measured through the return of the index Sofix. In its calculation are used data for the last calendar year.

Sharpе ratio – describes the return realized excess the free-risk return for a unit of risk taken. For risk-free return is accepted average overnight Sofibor for last calendar year. Sharpe ratio is calculated by extracting the risk-free return from the fund’s return for the last calendar year and than divide the result to the risk, measured by the standard deviation.

Tracking error – a measure of how closely a portfolio return follows the index to which it is benchmarked – Sofix. It measures the standard deviation of the difference between the portfolio and index (Sofix) returns, calculated on daily data of NAV/1 unit for the last calendar year and than annualized.