Martin Moeller

You might have heard about our Swiss & Global Equity team’s investment approach, which revolves around cash-flow return on investments (known as CFROI – Source: UBS HOLT) and the selection of companies with high and stable CFROI only for some of its portfolios. This is a measure that gives an indication of a company’s ability to create value.

Investors may find the strong fundamentals and stable economic, political and social aspects of Switzerland attractive in terms of equity investments in a year which may be dominated by geopolitical newsflow.

Electrification, weight-loss drugs, AI, digitalisation, cryptocurrencies, ESG darlings, 3D printing and the metaverse are some of the various themes that have been moving global markets recently. However, constantly shifting business environments and rapid technological advances can sometimes lead to a bubble-bursting situation for some themes and their major players.

Research has shown that 30 stocks is enough for a portfolio to efficiently diversify risks – and this without even taking into account the added benefits of active stock selection.

The investment landscape has changed substantially in the last six months: conflict has broken out in Ukraine, leading to various geopolitical and social ramifications, and inflationary pressure has been rising and remains a concern across many regions.

The ability to keep generating cash flow above cost of capital even during rough patches is a sign of stability in a company, says UBP’s Martin Moeller.

SMID-cap equities are poised to mean revert and outperform over the next three to five years. The best time to allocate to SMID caps is when earnings are “depressed”, i.e. now.