The world economy sits on a “wobbly stool” but its three legs – Europe, the United States and China – remain solid, UBS Wealth Management said, reaffirming its view that investors should take on some risk, mostly in high-yield credit.
“We remain mindful that the longer the problems in Europe persist, the more strain it can put on the U.S. economy. In this environment, we choose to take most of our risk in credit,” the brokerage arm of UBS said in a note to clients.
“The next few months are likely to bring continued volatility, and it may get worse before it gets better.”
Mark Haefele, head of investment at UBS Wealth Management told CNBC’s "Squawk Box Europe" : “We like high-yield credit, we like emerging market bonds and we like investment grade bonds.”
The high yield credit play has worked well so far, he said. “It’s positive on the year. And with this recent market volatility, the spreads have come out again, so there is an opportunity for investors to get back in.”
“Overall we’re neutral on equities. We have an overweight on U.S. equities because we think it’s one of the stronger economies out there…I would expect that equity markets have a relatively muted performance in this kind of environment,” he said.
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