UOB Risk-First Approach
Investors will often face uncertainties in their investment journey. Our proprietary Risk-First approach can help smoothen the ride for you: Optimal portfolios are recommended according to your risk profile, with a maximum of 20%, 30% or 40% allocated to Tactical investing (which has higher risk), and the remainder in Core investing.
Core Investing
Core Solutions are relatively lower-risk in nature, yet able to generate reasonable returns. They tend to be less volatile than the broader market, and can help you meet your longer-term financial goals. An allocation to Core Solutions can help to lower a portfolio’s volatility.
The following are our preferred Core Solutions:
High-quality bonds with at least a BBB rating are issued by companies with sound fundamentals, low borrowings and a diversified revenue stream. These companies tend to have stronger cash flow positions and the ability to repay debts. Holding them can help build portfolio resilience.
We prefer Global Bank and Industrial sector bonds that offer coupon rates above 3.5%. These are sectors that will benefit from the global recovery and have the ability to better withstand volatility arising from higher interest rates. Similarly, Asian Investment Grade (IG) bonds with shorter durations and yields of 3% to 4% are viewed as more defensive against a steepening yield curve. Investors need to be selective in an environment experiencing tighter monetary policies.
For H2 2022, Floating Rate Bonds (FRBs) present an alternative investment option to mitigate risks from interest rate hikes. With the prospect of coupon rates rising each quarter as policymakers hike rates to combat inflation, FRBs can buffer against price volatility. The inclusion of FRBs from higher-quality financials and multinational corporations also helps to improve a fixed income portfolio’s credit rating profile.
These offer a flexible and diversified asset allocation strategy, allowing you to capture opportunities across various market conditions and asset classes, including equities, bonds and alternatives.
With historical 12-month yields averaging 4% to 5%, they can provide a mix of both income and capital growth. They can also form a solid foundation in building up portfolio resilience and meeting financial goals. To capture long-term growth, managers can also consider allocating more to growth-oriented equity strategies.
Tactical Investing
Tactical strategies are identified through our award-winning VTAR framework, which focuses on analysing financial data in the four components of Value, Trend, Activity and Risk (VTAR).
The framework aims to provide a holistic view of financial markets and identify investment opportunities across asset classes, sectors, geographical regions and time periods.
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Megatrends are transformative forces that can shape the future of the global economy. These include technology-enabled transformation, evolving demographic and consumption trends and shifts in global economic power. They can redefine the investment landscape, offering compelling investment opportunities. You can position your portfolio to capture the long-term growth benefits from these structural changes.
Learn MoreAs major central banks raise interest rates to cool inflation, US Financials equities are expected to benefit from higher interest rate margins and economic reopening —thus presenting attractive tactical opportunities for savvy investors.
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