Overweight Eurozone and Japanese equities; underweight emerging markets

Recent turmoil in China, uncertainty in Greece and the prospects of a Fed rate hike are raising concerns of contagion throughout the global financial system. However, any potential fallout is expected to be contained, according to the contagion framework developed by the Chief Investment Office Wealth Management Research (CIO WMR).

What can investors expect?
CIO WMR believes the threat from Greece has essentially passed, any negative impact from a stock slide in China is diminishing, and the U.S. economy will weather an expected Fed rate hike. 

What should investors do?
CIO WMR recommends a globally diversified portfolio with a pro-risk bias over the next six months, preferring:

  • Eurozone equities, with earnings growth expected to reach 12% – 15%
  • Japanese equities, due to expected earnings per share growth of 18% this fiscal year
  • U.S. small-cap equities, with an American jobless rate of 5.3% helping bolster the economy
  • U.S. corporate bonds

In addition, CIO WMR underweights emerging market equities, and the Australian dollar relative to the British pound.

To learn more, 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.