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UOB Risk-First Approach

Investors will usually face uncertainties more than once in their investment journey. Our proprietary Risk-First approach can help smoothen the ride for you: Optimal portfolios are recommended in accordance with 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.

UOB Risk-First Approach UOB Risk-First Approach

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 to help you meet your longer-term financial goals. An allocation to Core Solutions can help to lower a portfolio’s downside 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 borrowing and a diversified revenue stream. These companies tend to have a stronger cash flow position and repayment ability, which builds portfolio resilience.

We prefer the Global Banks and Industrials sectors with a coupon rate above 3% which will benefit from the global recovery and better withstand higher interest-rate volatility. Similarly, Asian Investment Grade (IG) bonds with a shorter duration and yields of 2% to 2.5% are more defensive against a steepening yield curve. Investors will need to be selective in an environment with increasingly tighter monetary policy.

The net-zero carbon movement is set to boost demand for Green Bonds and Sustainability-linked fixed income instruments from both institutional and retail investors. One of the fastest-growing fixed income sectors, this asset class is worth US$1.8 trillion, with issuance set to increase by 25% in 2022.

Green and Sustainability-linked bonds have the potential to deliver similar returns as traditional bonds and those with attractive coupons over 3% and healthy balance sheets are poised to make attractive gains in 2022. Look for leading companies active in these spaces: renewable energy, green real estate, transport, batteries, hydrogen, digitalisation and energy efficiency.

Global Multi-Asset Funds offer a flexible and diversified asset allocation strategy, allowing investors 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 form part of a solid foundation in constructing a portfolio to meet financial goals. Investors can also consider more growth-oriented strategies by increasing a portfolio’s equity allocation to better-capture long-term growth.

Tactical Investing

Tactical strategies are identified using 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.

Other useful information that you may like to know:

Megatrends are transformative forces that can shape the future of the global economy such as technology-enabled transformation, evolving demographic and consumption trends, and shifts in global economic power. They can redefine the investment landscape, offering compelling investment opportunities. Investors can position their portfolios to capture the long-term growth benefits from these structural changes.

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The US economy has sped ahead in the economic cycle and US equities may have limited upside given its expensive valuations. In a high-conviction universe, European and Asia ex-Japan equities are more attractive as they are cheaper than US stocks. Being further behind in the economic cycle, they are at the start of the recovery path and have stronger catch-up potential.

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Other useful information that you may like to know:

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