Maintain overweight for U.S. equities, high-yield credit and the U.S. dollar
The S&P 500 currently sits at the top of the leaderboard for major global equity markets and the U.S. dollar has outperformed almost every major currency in 2014. In a world continuing to diverge, the U.S. stands out, according to the Chief Investment Office Wealth Management Research (CIO WMR) in the latest UBS House View—U.S. growth: Lost in translation .
U.S. reasserts its global economic leadership
The reasons for U.S. growth include bold monetary policy decisions by the Federal Reserve, a 2009 bank stress test and the U.S. energy independence revolution. However, robust U.S. growth hasn’t come without its caveats. Government debt remains high, wages are stagnant in some industries, and wealth inequality continues to rise.
Nevertheless, the rest of the world is looking to the U.S. to lead. The Eurozone needs to implement the same credible policy actions as the U.S. did. Japan’s recovery is faltering. And among emerging markets, there is more optimism for countries taking steps toward economic reform (India and China) over those that are not (Brazil and Russia).
What should investors do?
CIO WMR maintains overweight positions across an array of U.S. assets—U.S. equities, U.S. high-yield credit, and the U.S. dollar. And due to improving conditions in Canada, CIO WMR adds to an overweight position in the Canadian dollar relative to an increased underweight position in the Swiss franc.
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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