Wealth Strategies
Stay Invested Through Market Turmoil – UBS
The wealth management firm argues that investors mustn't capitulate as markets are hit by concerns about inflation, rates and disruptions.
Clients should stay invested in markets even though conditions
are volatile, UBS argues,
echoing a theme from other banks about how it is a mistake to
abandon the field.
“Looking ahead, the main driver of markets in the second half of
this year will be investor perceptions of whether we are headed
for stagflation, reflation, a soft landing, or a slump. We
believe that it is important for investors to stay invested,”
Iqbal Khan (pictured), co-president UBS Global Wealth Management,
told a recent conference in Singapore.
His colleague, August Hatecke, who is co-head UBS Wealth
Management Asia-Pacific, said: “While the economic outlook for H2
might be challenging, we stress the importance of being invested,
arguably more defensively at this stage in view of elevated
inflation levels. Against the current macroeconomic environment,
investors may wish to diversify with alternatives through hedge
funds and endowment-style investing.”
Such views chime with recent comments from Citigroup. The US bank
told this news service a few days ago that Investors should
think about moving cash into high-quality bonds to protect
against inflation and position for a likely rally in the tech
stock sector that has been indiscriminately pulled down this
year.
Elsewhere at the Singapore conference, UBS’s Khan said that as
Asian countries reopen from Covid-19 restrictions, he predicts an
increase in the number of family offices and entrepreneurs in the
new economy sector.
The rise in digital adoption among clients is why the Swiss bank
has launched UBS Circle One in APAC – an innovation to bring the
best actionable investment ideas to clients, Khan said.
“We recommend that investors should look to build a robust
portfolio that can grow regardless of where the global economy
heads. They should prioritise a liquidity portfolio that meets
three to five years of cash flow needs, consisting of a
mix of cash, cash alternatives, and short-duration bonds,” Tan
Min Lan, head chief investment officer, Asia-Pacific at UBS
Global Wealth Management, added. “Adding to defensive and quality
value stocks should be considered, while capital-protected
strategies can be used to mitigate downside risks. Also,
investors with holding power could use the sell-off to build
longer-term positions in areas where structural fundamentals
remain intact. Such themes include 5G, greentech, the ABCs
(artificial intelligence, big data, cybersecurity) of tech, and
China’s digital economy leaders.”