UBS Wealth Management’s CIO Year Ahead 2015: Outlook for a diverging world

Zurich and Basel - 2 December 2014

  • Investors face a diverging world in 2015, with uneven GDP growth, divided economic policies, and variable prospects for financial assets.
  • UBS Wealth Management’s Chief Investment Office (CIO) remains positive on equities and credit, with a bullish stance on the US in particular.
  • Regional outlooks vary; emerging markets and even some developed economies will be more prone to volatility during 2015.

CIO Year Ahead, the annual outlook published by UBS Wealth Management's CIO, forecasts investors facing a diverging world in 2015. GDP growth is uneven, central bank policies are not aligned, and geopolitical tensions have rekindled. Eurozone member states display contrasting levels of competitiveness, while gaps persist between reform agendas in emerging markets. CIO thus expects variable prospects for financial assets next year.

Mark Haefele, Global Chief Investment Officer at UBS Wealth Management and UBS Wealth Management Americas, says, "The magnitude and frequency of turbulent market events are likely to rise in 2015, but with global growth still apparent overall, our base case is still one of positive overall financial asset returns."

Highlights from this year's CIO Year Ahead publication:

  • UBS Year Ahead Investor Forum: Perspectives from this inaugural CIO event, at which top investment professionals from inside and outside UBS debated the outlook for 2015 (pp. 10-13).
  • Interviews with top CIO staff, including a special section on sustainability (pp. 6-9; 16-51).
  • CIO's investment positioning for the Year Ahead: See summary below and on pp. 14-15.
  • Full digital publication and videos available online.

2015 investment positioning for a diverging world 


  • GDP growth will accelerate faster than in the rest of the world, to 2.9% in 2015 from 2.2% in 2014. The US Federal Reserve will raise interest rates in 2015, but in a gradual, cautious manner.
  • CIO prefers US equities to global stocks. It is overweight the US dollar and US high-yield credit and underweight US high-grade bonds.

Mike Ryan, Chief Investment Strategist at UBS Wealth Management Americas, says, "We still like US equities relative to equities elsewhere in the world. But markets are no longer cheap, and that suggests gains will be more moderate with greater dispersion of returns in the year ahead."

Europe and Switzerland

  • Eurozone GDP will grow by 1.2% in 2015. In contrast to the Fed, the European Central Bankwill keep policy loose and may launch full quantitative easing if inflation does not improve.
  • The Swiss economy will remain a bright spot in Europe despite its exposure to Eurozone trade.
  • In this environment, CIO is underweight the euro and neutral on Eurozone equities.

Themis Themistocleous, Head of the European Investment Office at UBS Wealth Management, says, "Europe is a much riskier market than the US, with more economic problems and a very fragile recovery. However, if we get better growth in 2015, it will help the economies of countries that are under pressure."

Daniel Kalt, Head of the Swiss Investment Office and Chief Economist Switzerland, says, "The Swiss economy has benefited from high levels of competitiveness, low interest rates, strong immigration, and a booming property market. These conditions should hold despite muted Eurozone growth."

Asia Pacific and Emerging Markets

  • China's growth will slow to a more sustainable pace, below 7%. However, Asia Pacific will still outperform Latin America and emerging markets in Europe, the Middle East, and Africa.
  • CIO is underweight emerging market equities and US dollar-denominated EM corporate debt.  A rising US dollar may boost divergences between stronger and more fragile developing economies.

Jorge Mariscal, Head of the Emerging Markets Investment Office at UBS Wealth Management, says, "Global growth is uneven, and some emerging markets will be negatively exposed to a stronger US dollar, higher global yields, and lower commodity prices."

Min Lan Tan, Head of the Asia Pacific Investment Office at UBS Wealth Management, says, "A strong dollar has historically led to subdued returns for Asian equities outside Japan. That said, structural reforms, consumer trends and moderating commodity prices present select investment opportunities."

Ultra High Net Worth

Going into 2015, ultra high net worth investors are concerned about rising US rates, low cash yields, and concentrated holdings in flagship assets. Global family offices are seeking institutional trading strategies, hedging techniques, and greater granularity in asset allocation.

Simon Smiles, Chief Investment Officer for Ultra High Net Worth at UBS Wealth Management, says, "Ultra high net worth investors who are able to lock up capital for longer periods of time should explore investments in long-term themes such as rising protein consumption, death services and direct investments in Africa."

Hedge funds, Private markets, and Commodities

  • The diverging world should help equity hedge funds exploit stock price shifts.
  • Within private markets, ongoing European bank deleveraging will boost direct lending, while new technologies have opened up opportunities in the energy sector.
  • Commodity prices are likely to rise in 2015 following their 2014 declines.

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