UBS Rates Gold as Most Preferred Geopolitical Hedge and Portfolio Diversifier

UBS sees gold as an attractive geopolitical hedge and portfolio diversifier, rating the metal as most preferred in its investment lessons for the second half of the year report. The bank highlights strong market performance driven by AI investment and recommends diversified portfolios across various assets, regions, and sectors to navigate political and economic uncertainties.

UBS Highlights Key Investment Lessons for H2 2024

UBS’ Wealth Management published a report this week titled “Investment Lessons for the Second Half.” The report, authored by the UBS Editorial Team with major contributions from chief investment officers Solita Marcelli and Mark Haefele, highlights several key lessons for investors over the next six months.

The report emphasizes the importance of diversification across assets, regions, and sectors, especially given the political uncertainty highlighted by U.S. election debates. “So as investors head into the second half of the year, we advocate preparing for lower rates and an evolving political landscape by building a balanced and diversified portfolio across fixed income, equities, and alternative investments,” UBS recommends, adding:

We also see gold as an attractive geopolitical hedge and portfolio diversifier, and rate the metal as most preferred.

UBS also noted that the first half of 2024 saw strong market performance. “We continue to see a supportive backdrop for global equities, and expect discount factors to decline as inflation normalizes and central banks embark on an easing cycle,” the report details.

Secondly, Artificial Intelligence (AI) “remained a dominant driver of business investment and market performance,” UBS said. AI investments, notably NVIDIA’s 150% year-to-date surge, underscored the sector’s significant market influence. “We think investors should make sure they’re sufficiently invested in AI, with a tactical tilt to the enabling layer of the technology’s value chain and megacaps,” said UBS.

Source