UBS’s Zeltner Says Clients Should Stay Cautious on 2012 Markets

UBS AG’s head of wealth management excluding the Americas is advising clients to remain “cautious” in their investment decisions this year.

“A cautious approach is probably the right thing to do,” Juerg Zeltner said in an interview posted on UBS’s website today. “There is some unpredictability out there. Political decisions will heavily impact what happens to the markets.”

The Zurich-based bank, which managed 1.37 trillion Swiss francs ($1.48 trillion) in assets for wealthy clients around the globe at the end of September, is seeking new ways to keep customers informed of market opportunities.

UBS last year hired Alexander Friedman, a former chief financial officer for the Bill & Melinda Gates Foundation, as chief investment officer to help transform Switzerland’s biggest bank from an asset gatherer into a more active adviser. It is “extremely important” to reach out to clients and help them invest in “uncertain” markets, Zeltner said in November at UBS’s Investor Day in New York.

While customers are looking for opportunities to increase returns, “capital preservation is the No. 1 topic” on their minds, Zeltner said in today’s interview.

Zeltner recommends stocks in the U.S., “some opportunities in Switzerland,” and the U.K. market, which has “very attractive valuations” over euro-zone counterparts.

The Stoxx Europe 600 Index has gained 6.7 percent this year, while the S&P 500 increased 6.9 percent. The U.K.’s FTSE 100 index is up 5.7 percent in the same period.

Greek Default

“We already have seen quite a healthy performance of equity markets,” Zeltner said. “However, never forget, we still don’t have a holistic resolution of our issues or problems in the European debt crisis. Potential default of Greece is still out there.”

He also advises investors to be “very selective” with sovereign bonds as further downgrades of country ratings are “likely.” Possible alternative investments in fixed-income markets include bonds of supra-national organizations, covered bonds or “high-quality” debt of multinational corporations, he said.

To contact the reporter on this story: Elena Logutenkova in Zurich at elogutenkova@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net

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