Overweight eurozone equities and U.S. corporate bonds

China’s recent history of excess cash offers insights into the potential winners and losers in a global financial system awash in liquidity. Ultimately, either new investment must accelerate or investors will have to brace for low returns. Investors should be prepared for both, according to the Chief Investment Office Wealth Management Research (CIO WMR) in the latest UBS House View: Flattening mountains of cash (PDF, 1 MB).

This surplus of cash extends well beyond China as major central banks around the world have pumped at least $5.3 trillion into the system since 2007. The bottom line is, overall, assets on the receiving end of government-sponsored liquidity can perform beyond what might be expected by traditional valuation metrics.

What should investors do?
CIO WMR maintains a strong preference for eurozone equities. And although CIO WMR has reduced its overweight in U.S. equities to neutral, it still believes opportunities can be found in domestic stocks.

To understand how these trends may impact your individual strategy, connect with your UBS Financial Advisor or find a UBS Financial Advisor.

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*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.