Investment ideas from UBS at an “all-time high”
UBS recommends adjusting portfolios toward diversification and quality when markets are at all-time highs. For equities, it advises favoring quality stocks with stable earnings and cash flows, as well as dividend-paying stocks, while adding some protection through bonds and cash.
UBS has outlined principles for investors to follow when markets are at all-time highs. First, it recommends favoring “quality stocks” with stable earnings and cash flows. Second, it advises including companies that pay dividends in portfolios.
From a sector perspective, UBS mentioned healthcare and consumer staples, which tend to be defensive. It recommended a selective approach to energy and cyclical sectors. At the same time, it advised adjusting overly high allocations to growth stocks.
UBS did not say to reduce equity allocations across the board. Instead, it recommended maintaining some allocation to bonds and cash to prepare for volatility. It also suggested a modest allocation to nontraditional assets such as alternative investments and infrastructure.
UBS emphasized considering valuation and earnings metrics together when making investment decisions. It said individual stocks should be assessed based on their payout ratios and earnings stability. It recommended reducing the size of high-risk positions.
Finally, UBS recommended reviewing portfolio rebalancing on a quarterly basis. It said sectors and asset allocation should be adjusted in response to changes in market conditions. It said investors should check the balance across asset classes.
Sources: Investing.com News
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