In our inaugural Asset Allocation Quarterly, we named ‘higher volatility’ a core investment theme for coming months. Specifically, we said ‘as the cycle matures, the range of potential growth, inflation and interest rate outcomes is broadening from the very narrow range investors have been used to for much of the past decade post-financial crisis.’ The sharp rise in market volatility in October was a particularly acute illustration of this changing environment. And while we do expect volatility to calm somewhat from elevated levels over coming weeks, we also think the overall ‘volatility regime’ will be structurally higher than what investors have been used to over recent years. This does not mean we are of the view a bear market has begun—we do not think it has. But October’s price action is a reminder that returns in multi-asset portfolios are likely to be more muted on a risk-adjusted basis, and portfolio management will probably require more tactical positioning as we move into the late stages of the economic cycle. In this Macro Monthly we discuss our views on recent market volatility, why we believe we are in a higher volatility regime, and how we are navigating this environment in our portfolios.

Distribution Partners

In order to proceed, you must confirm that you are a qualified investor based in Switzerland.

For marketing and information purposes by UBS.

For qualified investors/ professional clients only. The information and opinions contained in this document have been compiled or arrived at based upon information obtained from sources believed to be reliable and in good faith, but is not guaranteed as being accurate, nor is it a complete statement or summary of the securities, markets or developments referred to in the document. UBS Asset Management Switzerland AG and / or other members of the UBS Group may have a position in and may make a purchase and / or sale of any of the securities or other financial instruments mentioned in this document.

Before investing in a product please read the latest prospectus carefully and thoroughly. Units of UBS funds mentioned herein may not be eligible for sale in all jurisdictions or to certain categories of investors and may not be offered, sold or delivered in the United States. The information mentioned herein is not intended to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. Past performance is not a reliable indicator of future results. The performance shown does not take account of any commissions and costs charged when subscribing to and redeeming units. Commissions and costs have a negative impact on performance. If the currency of a financial product or financial service is different from your reference currency, the return can increase or decrease as a result of currency fluctuations. This information pays no regard to the specific or future investment objectives, financial or tax situation or particular needs of any specific recipient. The details and opinions contained in this document are provided by UBS without any guarantee or warranty and are for the recipient's personal use and information purposes only. This document may not be reproduced, redistributed or republished for any purpose without the written permission of UBS Asset Management Switzerland AG. Source for all data and charts (if not indicated otherwise): UBS Asset Management

This document contains statements that constitute “forward-looking statements”, including, but not limited to, statements relating to our future business development. While these forward-looking statements represent our judgments and future expectations concerning the development of our business, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from our expectations.