To limit exposure to risks like the Middle East conflict, UBS analysts recommend a strategy based on diversification and targeted asset allocation. They advise maintaining a diversified portfolio to manage geopolitical risks while staying invested to benefit from a supportive macroeconomic environment.
Potential disruptions, such as those to oil supply routes like the Strait of Hormuz, make oil-related assets a useful hedge. Although oil prices have remained stable, a major escalation could push Brent crude prices above $100 per barrel.
UBS also highlights gold as a valuable asset during geopolitical tensions, citing its 30% rise this year. Gold offers a safe-haven benefit, driven by expected U.S. Federal Reserve rate cuts and rising demand.
Lastly, UBS recommends high-quality credit assets for stability during market volatility, while emphasizing that global markets should focus on broader economic factors if the conflict remains regionally contained.