[SINGAPORE] Investors should consider allocating part of their portfolios to transformational innovation as a way to diversify risks in an increasingly volatile world, said Ulrike Hoffmann-Burchardi, chief investment officer for global equities in the chief investment office at UBS.
Among these opportunities, artificial intelligence (AI), power and resources, and longevity are structural growth ideas that can deliver attractive returns in the years ahead, noted Hoffmann-Burchardi at UBS’ mid-year outlook conference in Singapore on Tuesday (Jul 1).
“The next US$10-trillion companies will most likely arise from one or more of these transformational opportunities,” she said.
AI – which Hoffmann-Burchardi said is “underappreciated” – will boost productivity to levels unseen before, surpassing productivity in the Internet era.
The power and resources sector will likely be driven by the “acute mismatch” in demand and supply, especially as more electricity is needed for AI data centres.
Meanwhile, the ageing population in many economies worldwide will drive sectors that boost longevity or support an older demographic.
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Immediate benefactors include biotech, pharmaceuticals and medtech companies, while further opportunities lie in the wealth management, life insurance, real estate, and consumer and leisure sectors, she added.
Outlook for H2
For the second half of 2025, UBS expects investors to continue diversifying even as tariff and macroeconomic risks moderate.
Tan Min Lan, head of the chief investment office for Asia-Pacific at UBS, noted that global growth will likely slow in H2, especially as front-loading activities stop.
Tariffs will likely settle at around current levels – at 30 to 40 per cent for China and 10 to 15 per cent for the rest of the world, she said.
Global interest rates are also set to fall further, with the US Federal Reserve expected to cut rates by 100 basis points in the next 12 months from September, said Tan.
For investors under-allocated to broad equity markets, she recommends gradually increasing exposure to diversified global stocks or balanced portfolios to position for stronger potential returns in 2026 and beyond.
At times of low, or falling, cash interest rates, investors should also seek durable income, she added.
Furthermore, investors should lower their exposure to the greenback, as the US dollar will likely weaken over the next 12 months, and the currency’s traditional role as a relative “safe haven” during periods of market uncertainty is under question.
This makes gold a highly effective hedge against geopolitical risk, while alternatives – including hedge funds, private credit, value-oriented buyouts, and quality global real assets – will help deliver returns and enhance portfolio resilience.
Zooming in on Singapore, Tan views Singapore equities as attractive, as the market offers a defensive safe haven amid ongoing geopolitical uncertainty, backed by a stable currency, generous dividend yields, and a steady earnings outlook.
