Cash and bonds have historically been an effective way to diversify portfolios, but due to a new phase of monetary policy stimulus, these assets are increasingly becoming at risk. In fact, in a world where cash and bonds have low to negative yields, investors will have to work harder to find lower volatility, diversification and/or higher returns.
The latest edition of the UBS House View from CIO Wealth Management Research offers a breakdown of current economic trends and strategies investors should consider in light of this constantly shifting landscape.
- Investors should prepare for even more negative real yields on cash if inflation rises.
- Bonds look increasingly at risk as negative interest rate and QE policies may now be reaching their limits.
- For investors seeking diversification and returns in a world where bonds may be at risk of sharp drawdowns, alternatives are worth considering. These includes:
Hedge funds—Can potentially provide effective portfolio diversification and returns while still comparing favorably with other assets in a strategic allocation.
Private markets—Give managers of funds the flexibility to buy assets and add value in illiquid markets.
CIO WMR is also overweight equities relative to bonds in their global tactical asset allocations, overweight emerging market equities vs. Swiss equities, and is introducing a new position on a basket of emerging market currencies vs. a group of G10 currencies.
To understand how to best incorporate these insights into your own investment strategy, connect with your UBS Financial Advisor or find one.
Join us as, John Savercool, Head of the UBS U.S. Office of Public Policy and Mike Ryan, Chief Investment Strategist, UBS Wealth Management Americas, will lead the fully interactive UBS House View monthly call to offer an election preview and discuss the latest on our market views and investment strategy guidance. Mark your calendar as this call takes place the first Thursday of every month at 1:00 p.m., ET / 10:00 a.m., PT.
Next call: Thursday, November 3, 2016
U.S. toll-free dial in: 1-877-200-4456
International (toll) dial in: 785-424-1743
Participant code: 46502#
Listen to the replay from our October 6, 2016 call:
U.S. toll-free dial in: 866-415-9424
International (toll) dial in: 205-476-0997
Replay code: 46502#
*The views expressed on the call do not constitute a personal recommendation or take into account the particular investment objectives, investment strategies, financial situation and needs of any specific individuals. They are based on numerous assumptions. Different assumptions could result in materially different results. We recommend that you obtain financial and/or tax advice as to the implications (including tax) prior to investing.