For long-term investing, UBS recommended industries involved in space travel and fintech. There also will be a growing market for medical devices as the population ages, and opportunities in sectors where retirees spend money such as travel and leisure activities.
On the fixed-income side, UBS said the maturing economic cycle can be perilous for bond investors as labor markets tighten, corporate leverage increases, and central banks restrict policy. However, bonds can provide returns and help stabilize portfolios.
“We see particular opportunities in long-duration U.S. government bonds and Asian high yield. We also favor euro ‘synthetic credit exposure,’ which is a strategy that offers exposure to corporate credit by selling credit default swaps instead of buying cash bonds. Various investment vehicles, such as notes, can provide access to this market,” the report said.
With a growing interest in sustainability projects and in sustainable investing, UBS sees a future in bonds of this type. The fast growth in the issuance of sustainable bonds and strong demand for them have expanded the range of bonds that are available, UBS said. The same can be said for sustainable investing in equities.
“As it stands, investors now have the solutions necessary to build a sustainability-oriented portfolio that mirrors traditional fixed-income and equity offerings,” UBS said.
Commodities also present an opportunity in the late stages of an economic cycle.
“The latter stages of the economic cycle have historically been one of the better times to invest in commodities. Overall demand tends to stay high while inventories run low. In the six months prior to the last three U.S. recessions, a diversified basket of commodities outperformed global equities by an average of 15 percent,” the report said.
The report can be found here.