We’ve selectively highlighted our best ideas that align with the current house view. The selected themes can also help investors tap into our messages in focus. The themes are also presented as part of an asset allocation, to provide better information about how each theme fits within a total portfolio.
In this month’s iteration, our selections focus on themes with emerging market exposure, income opportunities, and global equities that provide upside leverage to anticipate the inflection. Many of the selected themes are positively exposed to China’s economic reopening, and many provide a way to express CIO’s preference for emerging markets. These selections reflect CIO’s view that emerging market equities and select global regions will likely outperform US equities.
We’ve also shifted to be more selective in regards to our “Position for the era of security” message in focus, as we recently closed the “Security takes center stage” theme. The theme had significant exposure to defense companies, and with the outlook less clear on defense spending moving forward, we saw this as a prudent time to take gains. As such, we shift our focus to themes that still align with the era of security concepts, but also have leverage to the Inflation Reduction Act in the United States, namely the “Resilient spending” theme, and “Greentech goes global.”
Our new approach aims to simplify our thematic offering by providing actionable ideas that we believe offer upside opportunities. Moving forward, we will provide the thematic asset allocation grid on a monthly basis. For more information on the selections, please see the full report for each theme.
Download the new Asset allocation: Themes implementation chart or access the full House View Investment Strategy Guide .
Tactical equity and longer-term themes
Tactical equity themes capture opportunities that cannot be expressed through size, sector, and style allocations. Instead, our thematic lists reflect groupings of securities that we view as well positioned to benefit from a common set of drivers. Drivers for tactical themes include macroeconomic forces, policy changes, geopolitical events, temporary mispricing of opportunities (valuations), or timely factors. Our tactical themes span across asset classes, including equity, fixed income, and commodities. The table below shows alignment to our messages in focus. For theme details, see Tactical US Equity Themes: monthly update, 17 February 2023.
Longer-term themes are expected to unfold over a longer time horizon, perhaps over the course of a decade or longer. These themes are based on secular trends that, CIO anticipates, will endure over multiple business cycles. Longer-term themes extend beyond the time frame of our strategic asset allocation. Learn more about the longer-term themes and our thematic investment framework based on three megatrends in our " Thematic guide".
Main contributors: Michelle Laliberte, CFA, Thematic Investment Strategist; Nadia Lovell, Senior US Equity Strategist
Read and share the guide, Simplifying themes: Expressing themes in a portfolio context .
Watch a short video on the main themes here.
This content is a product of the UBS Chief Investment Office.