Overweight U.S. equities and U.S. high-yield credit; increase overweight to Eurozone equities

Global central bank stimuli continue to provide support for diversification, especially in alternative investments, according to the Chief Investment Office Wealth Management Research (CIO WMR) in the latest UBS House View: An alternate route (PDF, 1 MB).

Highlights of recommended alternative investments include:

Real estate

While purchasing a home is most people’s introduction to alternative investments, CIO WMR recommends looking at U.S. commercial property, especially outside the top megacities. In addition to recently continuing to rise in value, property acts as an effective hedge against inflation, since over the long-run, owners can expect rent income to increase in line with inflation.

Hedge funds

Despite mixed reputations in recent years, hedge funds—adjusted for volatility—have added diversified returns to portfolios. CIO WMR recommends moderate investors allocate 10% of their portfolio to hedge funds.

Private markets

Potentially the most profitable investments in portfolios, vehicles of the private markets must be strong performers given the risk, illiquidity and long-term commitment tradeoffs.

Sustainable investing

CIO WMR recommends seeking out investments that offer potentially strong financial returns while also promoting a larger social good. Important themes and opportunities worth exploring include pioneering oncology treatments and Africa’s growing need for power generation and access to water.

What should investors do?

CIO WMR also recommends further exposure to Eurozone equities, given the European Central Bank’s (ECB’s) quantitative easing program. In currencies, CIO WMR prefers the U.S. dollar relative to the euro.

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

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