Overweight Eurozone equities and U.S. small- and mid-cap equities

Against a global backdrop of easy-money central bank policies, Eurozone assets stand to benefit, particularly Eurozone equities, according to the Chief Investment Office Wealth Management Research (CIO WMR) in the latest UBS House View: The marshmallow test (PDF, 1 MB).

Three reasons support CIO WMR’s favorable position for Eurozone assets:

  1. The impact of supply and demand factors within the European Central Bank’s (ECB’s) quantitative easing program
  2. The fall in the euro against the dollar (20% in the last month) will have a powerful impact on earnings and shows no sign of being contested by the Fed
  3. The timing of the ECB’s monetary policy remains promising since it comes at a time of accelerating growth

The U.S. and the rest of the world are also playing a supportive role. Growth in the U.S. is expected to remain strong, with 200,000 jobs created for the 12th month in a row in February and unemployment now down to 5.5%.

Across the globe, monetary policy remains geared toward bolstering growth, with at least 25 central banks having cut interest rates this year—from Canada and Australia to China and Thailand.

What should investors do?
CIO WMR recommends that, in addition to tactical allocations, investors maintain a well-diversified portfolio, rebalance regularly and seek alternative means of return outside liquid securities.

To understand how these trends may impact your individual strategy, connect with your UBS Financial Advisor or find a UBS Financial Advisor.

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*The views expressed on the call do not constitute a personal recommendation or take into account the particular investment objectives, investment strategies, financial situation and needs of any specific individuals. They are based on numerous assumptions. Different assumptions could result in materially different results. We recommend that you obtain financial and/or tax advice as to the implications (including tax) prior to investing.