UBS, the world's largest wealth manager, said investors should keep their money in the stock market this year regardless of their risk appetite.
Markets have been volatile in recent months as investors re-position for slower global growth and heightened uncertainties. That's set to continue, leading some investors to consider whether it's time to get out of equities and hold cash before a recession hits — but UBS said there's still money to be made in the stock market.
"You have to stay invested, whatever your risk tolerance can bear," Mark Haefele, global chief investment officer at UBS Global Wealth Management, said on Monday.
"The period of 18 months to 6 months before a recession is often when you get most of your returns because that's when economies do strongly," he told clients at the UBS Wealth Insights forum in Singapore.
He noted that investors would have missed out on a 10-percent rally if they had sold their holdings on Christmas Eve — when U.S. stocks experienced a massive sell-off — and re-entered the market this month. In addition, a recession is not likely to happen this year, so corporate earnings have room to grow, although at a slower pace than before, he said.
Where to put your money
Haefele said UBS is "overweight" on global equities, adding that investors should diversify their share holdings outside of their home market to avoid an over-exposure to particular risks.
"At this time, it's better to invest globally. People tend to concentrate on their own region and that gives them two kinds of over-exposure: One is you're overweight a certain region, and also some regions tend to be overweight certain sectors," he said.
In Asia, UBS likes China, Singapore, South Korea and Indonesia, said Tan Min Lan, head of the Asia Pacific investment office at UBS Global Wealth management. The bank doesn't like markets in Hong Kong, Taiwan, Malaysia and the Philippines, she added.
On specific stocks, Tan said UBS likes "high-yielding Asian equities" such as major Chinese banks, and real estate investment trusts in Singapore and Hong Kong with large market capitalization.
Returns of 12%-15%
"If you take into account corporate fundamentals, still positive growth rates and China policy easing that is ongoing, we do think that this year, equity markets will probably return between 12 to 15 percent in total returns," Tan told CNBC's "Capital Connection."
But trade tensions between China and the U.S. remain the elephant in the room, and that "will define Asia's fortunes not just for 2019, but also in the years ahead," she noted.
"Our base case is that there will be sufficient progress in the trade negotiation to delay further tariffs escalation, but the substantive issues will still remain. So, the most likely scenario for U.S.-China is in the years ahead, there will still be many rounds of fights or talks over a broad range of issues," she said.
WATCH: Brexit is not amenable to rational financial analysis, UBS says
