How Can Investors Diversify Their Equity Holdings

UBS maintains a positive medium-term outlook for equities but urges investors to diversify beyond US megacaps into broader regions and sectors to manage concentration risks.

Key Takeaways

• 1.Equities are expected to continue their rally supported by strong corporate earnings, with UBS setting an S&P 500 target of 7,900 for December 2026.
• 2.Investors should diversify beyond US megacap tech stocks into other regions like Japan and China, and sectors such as health care and financials.
• 3.Rebalancing concentrated tech positions is recommended, with a focus on diversifying across the AI value chain and utilizing structured investments for downside protection.

Table of Contents

• Key message
• 01 We believe the medium-term outlook for equities is positive.
• 02 But we expect future gains to come from a broader range of sectors and regions, beyond the US megacaps.
• 03 We believe investors should take steps to rebalance concentrated positions.
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