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With a decade drawing to its close, investors are looking ahead to discern the mega-trends of the coming ten-year period. Here’s what the world’s largest wealth manager UBS suggests you should do with your money.

While 2019 seems to end on a high note for investors, reversing the losses of a year ago, most of the concerns that made predictions so tough for the year have not gone away: Donald Trump’s penchant to look for trouble, mainly with China; the protracted British exit from the EU; months of at times violent strive in Hong Kong – the list of actual and potential trouble spots seems endless – and that’s before the effects of climate change on the global economy are factored in.

UBS, Switzerland’s biggest lender, has looked into the crystal ball and defined the major hypotheses underlying its investment strategy for the next decade. Here’s what it came up with:

  • «Lower returns. Overall, we anticipate lower returns and higher volatility for most financial assets than in the past decade.»

Much of why average returns are expected to decline is a function of low bond yields and a weaker average performance of equities than over the past decade. The meager bond yields obviously are a function of the low-interest rates. UBS anticipates short-term interest rates to remain low relative to historical norms, even if they may average somewhat higher than in the past years.

This will combine with lower returns for equities – with 4 to 6 percent nominal returns in developing markets in local currency terms. Modest global economic growth and contracting profit margins are likely to weigh on returns, UBS said. And yet, it is equities that present the best option for investors who aim for above-average returns.

  • «Benefit from growth. We see opportunities in companies that enable and benefit from digital transformation and genetic therapies, and in those alleviating water scarcity.»

With major challenges lurking in years ahead, investors will likely need a bank to help them detect the most promising investment opportunities – after all, banks would like to survive and for that purpose need to boost their fee and commission income.

In what the bank dubbed the «Decade of Transformation», it identified three areas that seem ideally placed for the race for return.

Investing in Genetic Therapies