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The Tell: Why the tariff fight prompted a major wealth manager to change its U.S. portfolios

Rising U.S.-China trade tensions rattled global markets this week, and prompted one major wealth manager to make a shift in its U.S. portfolios in a bid to reduce risk exposure.

In a late Thursday note, Mark Haefele, chief investment officer for UBS Global Wealth Management, said the firm was dropping its overweight positions in emerging market hard currency bonds versus U.S. government bonds. UBS was the fifth largest U.S. wealth management firm, with around $601 billion in private-client assets under management in 2018, according to Barron’s.

“The spreads on emerging market bonds have remained resilient even as trade tensions have escalated, a testament to their solid fundaments, but the spreads are likely to widen if additional tariffs increase growth concerns,” Haefele wrote.

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