The headline story of early 2019 for investors has been the dramatic upswing in global markets, especially in contrast to the drawdown and volatility spikes we saw in late 2018. But as always, the investment landscape is complex and a number of risks still lurk on the horizon.
China’s economic stabilization is certain to drive increased investment there. Today, most investors are underweight China relative to its share of global markets. We believe there is an increasingly strong case that the time has come for asset allocators to consider a standalone allocation to China.
Investors have been diversifying their portfolios into real assets and related alternatives for the last two decades and we expect this to continue. But the evolving global macro forces impacting regional economies and currencies underscores the need for a local market focus vs. a regional or global focus for real asset investments.
Sustainable investing has been around for at least 20 years. But in the last few years, investors have begun to understand that rather than just a ‘feel-good’ option, sustainability can also help improve and safeguard investment returns.
For fixed income investors, the US Fed’s decision to hold off on further rate hikes puts it in closer alignment with generally dovish central banks globally, which should help carry strategies continue to generate positive contributions to total returns for the remainder of 2019.
The strengthening US and Chinese economies should support emerging markets assets, which have provided a rich source of potential alpha for investors. But these markets also require a long-term strategy.
In the current economic environment, we believe active equity managers have an advantage with valuations that are no longer stretched on traditional metrics. In a world that is heavily exposed to passive equity and fixed income investments, we see a number of opportunities for excess returns that are only available to active managers.
With insights across both traditional and alternative asset classes, we trust you will find our mid-year update thought-provoking and helpful in meeting the investment challenges that lie ahead.
More from Panorama: Mid-Year 2019
Views and opinions expressed are presented for informational purposes only and are a reflection of UBS Asset Management’s best judgment at the time a report or other content was compiled. UBS specifically prohibits the redistribution or reproduction of this material in whole or in part without the prior written permission of UBS and UBS accepts no liability whatsoever for the actions of third parties in this respect. The information and opinions contained in the content of this webpage have been compiled or arrived at based upon information obtained from sources believed to be reliable and in good faith but no responsibility is accepted for any errors or omissions. All such information and opinions are subject to change without notice but any obligation to update or alter forward-looking statement as a result of new information, future events, or otherwise is disclaimed. Source for all data/charts, if not stated otherwise: UBS Asset Management.
Any market or investment views expressed are not intended to be investment research. Materials have not been prepared to address requirements designed to promote the independence of investment research and are not subject to any prohibition on dealing ahead of the dissemination of investment research. The information contained in this webpage does not constitute a distribution, nor should it be considered a recommendation to purchase or sell any particular security or fund. The materials and content provided will not constitute investment advice and should not be relied upon as the basis for investment decisions. As individual situations may differ, clients should seek independent professional tax, legal, accounting or other specialist advisors as to the legal and tax implication of investing. Plan fiduciaries should determine whether an investment program is prudent in light of a plan's own circumstances and overall portfolio. A number of the comments in the content of this webpage are considered forward-looking statements. Actual future results, however, may vary materially. Past performance is no guarantee of future results. Potential for profit is accompanied by possibility of loss.
© UBS 2019. The key symbol and UBS are among the registered and unregistered trademarks of UBS.