Paris Syndrome The French election, Washington, London and you.

The possibility of a Le Pen victory in France. Brexit talks in London. Evolving Trump Administration policies in the U.S. A growth slowdown in China.

How should investors read these signs? What portfolio measures must you take to benefit, or shield, from these developments? What should your asset allocation look like?

CIO Wealth Management Research (CIO WMR) shows how it's approaching this fluid environment in the new UBS House View: Paris Syndrome (PDF, 2 MB).

Additionally, UBS has also updated our Capital Market Assumptions to reflect our latest research and long-term views. Capital Market Assumptions are our forward-looking risk and return expectations across asset classes. These assumptions help shape our Strategic Asset Allocations, which are also being updated. Strategic Asset Allocations are diversified portfolio models that we expect will produce a reasonable trade-off between risk and return over a full market cycle depending on an investor’s preferences and risk profile.

Key takeaways

  • UBS has updated our Capital Market Assumptions and Strategic Asset Allocations. Read the report and talk to your Financial Advisor to understand the thinking behind these updates and their potential impact on your portfolio.
  • Looming elections in Europe, the UK’s talks on EU exit, and the evolving policies of the new Trump administration all pose risks.
  • The outlook for international stocks is favorable in spite of political concerns. Economic data has been beating expectations in most parts of the world, market momentum is positive, and volatility is low.
  • CIO WMR does not regard the US dollar as the best investment to benefit from the US economic recovery or the likely pro-growth agenda of the Trump administration.
  • CIO WMR is overweight global equities, US stocks, and US high yield credit versus government bonds. CIO WMR prefers the EUR versus the USD and SEK versus CAD, and also favors a basket of developed market currencies.
  • Talk to your UBS Financial Advisor about how you can best position your portfolio to take advantage of these upcoming global trends and shifts in the investment landscape.

CIO WMR's approach to navigating this investment environment is to develop realistic sce­narios that address the effects of politics on markets while being conscious that overestimating political impacts can be just as damaging as underestimating them. CIO WMR also believes that other forces such as corporate earnings, economic fundamentals, and central bank policy are likely to be more decisive over the next six-month investment horizon.

CIO WMR believes that encouraging economic data, positive market momen­tum, and low volatility justify a moderately risk-on stance. In its asset allocation, CIO WMR recommends an overweight of US equities, global equities, and US high yield credit relative to govern­ment bonds. And CIO WMR favors the euro relative to the US and Canadian dollars respectively.

Is your portfolio prepared for expected global shifts? Together we can find an answer. Connect with your UBS Financial Advisor or find one.

Next call: Thursday, April 6, 2017

Join us for our next UBS House View monthly call and get the latest on our market views and investment strategy guidance. *Mark your calendar as the UBS House View call takes place the first Thursday of every month at 1:00 p.m., ET/10:00 a.m., PT.

Call details:
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 March 2, 2017 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.