From TINA to TIARA

UBS House View Investor's Guide November

The UBS House View Investor's Guide is a monthly snapshot of our Chief Investment Office's (CIO) global views. This publication also offers you in-depth regional insights and targeted investment ideas to help you best implement CIO’s views in your investment strategy.

The current edition "From TINA to TIARA" covers the following topics:

We’re moving from a TINA (There is no alternative) market to a TIARA (There is a real alternative) one. What does this mean for equities and your portfolio?

For much of the past decade, growing wealth has largely been about buying equities and staying invested. Central bank stimulus held cash and bond yields firmly below rates of inflation, while revenue growth from technology giants, falling tax burdens, and low borrowing costs supported stocks. Global equities have returned an annualized 9.3% above inflation, versus –0.8% for cash (in US dollars). It’s been a TINA market.

But we’re now entering a TIARA market. Central bank balance sheets are peaking as stimulus is withdrawn amid strong economic data, and this month’s bond sell-off pushed real 10-year US yields to 1.03%, a seven-year high, while US cash rates are on track to be close to 3% by the end of next year. The existence of lower-volatility alternatives to equities with positive real returns is now leading some investors to question whether stock market volatility is still worth enduring. These concerns came to a head in the recent equity sell-off, which included the worst week for global markets since February.

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