Year Ahead 2020 and UBS Investor Watch The Year of Choices, The Decade of Transformation

Seek returns in a Year of Choices and look toward investment opportunities in a Decade of Transformation.

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As 2020 approaches, many investors are feeling anxious, with geopolitical tensions a primary source of their unease. That's one of the key conclusions of the UBS Investor Watch, which surveyed global investors on their outlook for 2020 and beyond. So how should investors position amid this uncertainty? The UBS Chief Investment Office has released the Year Ahead 2020, which offers guidance on navigating the market and highlights key investment trends and opportunities.

Our recent UBS Investor Watch survey also revealed that 72% of investors describe the investment environment as more challenging than it was five years ago. From a CIO perspective, we too see challenges, and offer guidance on navigating the year ahead.

From the US presidential election to trade negotiations and fiscal policy, choices will increasingly shape outcomes in 2020. Keep reading to discover how we think these choices will play out, the impact they could have on your investments, and the choices you can make to help limit your vulnerability to these risks.

Year Ahead 2020 and UBS Investor Watch Uncertainty

Investors look to the year ahead with greater caution. In 2020, volatility among trade- and investment-dependent companies is likely to remain elevated, with returns dependent on political choices.

Year Ahead 2020 and UBS Investor Watch Politics

In a globally interconnected world, investors view the US-China trade conflict, the political environment where they live, and the 2020 US presidential election as the biggest threats to portfolio performance.

Year Ahead 2020 and UBS Investor Watch The decade ahead

Working-age populations will begin to shrink in high-income countries, and the trend toward deglobalization is likely to gain momentum. Major environmental and technological movements and advances are likely to disrupt existing norms.

Year Ahead 2020 and UBS Investor Watch Mega trends

Investors have identified a number of "mega trends" they see changing the world, most notably an aging population, increasing use and influence of technology along with diminishing natural resources.

Uncertainty: Is now a good time to invest?

UBS Investor Watch

What investors are thinking

of investors think we are moving toward a period of higher volatility.

of investors believe the investment environment is more challenging than 5 years ago.

of investors are unsure if now is a good time to invest.

Year Ahead 2020 What we think

The US-China trade conflict has been among the primary drivers of market volatility over the course of the past year. Although there have been signs of reconciliation between China and the US in 4Q19, investors may start to worry that a re-elected President Trump, no longer facing a future election, could become more adversarial with China. He has already warned that a deal negotiated in his second term would be “far worse.” Meanwhile, his political rivals’ trade rhetoric suggests that a Democratic president would be unlikely to adopt a more conciliatory approach.

Year Ahead 2020 Your action

By choosing investments that are less exposed to these political decisions, investors can reassert some control over their portfolios and, in our view, better prepare themselves for the future. We recommend seeking domestic-and consumer-oriented investments, which should deliver more reliable returns, while also looking for long-term beneficiaries of the deep-seated US-China rivalry.

Want to know more?

To get more insight into the investor's view on global markets, download the full UBS Investor Watch report.

Want our perspective?

To learn more about our investment outlook, download your copy of the Year Ahead 2020 (available in different languages).

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Politics: Can you win in the US election?

UBS Investor Watch What investors are thinking

think markets are driven more by geopolitical events than business fundamentals, such as profitability, revenue and growth potential.

are concerned over the 2020 US presidential election.

of global investors plan to or would consider discussing the election’s impact on their portfolios with their advisors.

Year Ahead 2020 What we think

The US election issues up for grabs include how to structure a healthcare system for an aging population, growing income inequality, the role of the nation-state in an interconnected world, technological change, and who pays for environmental damage. The polarization between candidates, magnitude of issues, and market capitalization of the US and UK markets make these elections relevant for investors around the world. How each issue is decided will shape global trends and define sectoral winners and losers.

Year Ahead 2020 Your action

Investors should not position in the hope or expectation of a specific outcome to the presidential election. Instead, we think diversification is key. The US is one of our preferred markets, but US stocks could face higher volatility as the election approaches, and some individual sectors – such as technology, energy, financials, and healthcare – could suffer from price swings due to the risk of heightened regulatory scrutiny.

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The Decade of Transformation: Is there light at the end of the turmoil?

UBS Investor Watch

What investors are thinking

are optimistic about investment returns over the next decade.

are interested in sustainable investing.

are interested in aligning their investment portfolios with anticipated trends.

Year Ahead 2020 What we think

Overall, we expect the Decade of Transformation to generate lower returns and spur higher volatility for most financial assets than in the past decade. Though such a transformation can be uncomfortable, it will also bring investment opportunities. As with globalization, de-globalization will also mean winners and losers. Demographic change will boost emerging markets and sectors like healthcare. The technological revolution will present myriad options for investment in areas such as 5G, artificial intelligence, cloud computing, and genetic therapy. Meanwhile, the shift in consumer preferences and government regulation toward more sustainable products and services is only just beginning, and could prove to be the most exciting and durable growth opportunity of the next 10 years.

Year Ahead 2020 Your action

Investors targeting a given level of return in well-diversified portfolios may need to increase their allocation to riskier assets such as equities, and reduce their allocation to assets like bonds. Equally, investors targeting a given level of risk may need to accept lower, or even negative, returns as a necessary price of that safety. To balance the risks of a Decade of Transformation with potential long-term opportunity, investors will need to build a robust financial plan. They must think carefully about how much to devote to short-term needs, while setting aside a sufficient amount to invest for the long term. We believe our Liquidity. Longevity. Legacy. (3L)* approach can help investors achieve their financial objectives, reduce their anxiety about short-term risks, and enable them to take advantage of longer-term opportunities.

Try to achieve your short- and long-term financial goals

We think the coming decade will be a challenging one for investors to achieve their financial goals, with various challenges to navigate. But a Decade of Transformation will bring opportunities with it too. How effectively you can avoid the short-term risks to take advantage of the long-term opportunities will dictate your personal financial success in the decade ahead.

Pick a challenge you'd like to take on.

Mega trends

Year Ahead The world in 2030: 8 mega trends to watch

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Recommended reading

UBS Investor Watch

UBS Investor Watch brings you the views of investors around the world. Explore our reports and see how they might help you reach your goals.

Discover our framework

Build a plan using Liquidity. Longevity. Legacy. approach. This framework is geared toward aligning your assets with your financial objectives both short- and long-term.

Investment opportunities

Discover how you can effect real change in society through sustainable investing or find out why disruption is everywhere – but so are the investment opportunities.