UBS strategists share their best trading ideas for 2021

Published Wed, Nov 18 20208:20 AM ESTUpdated Wed, Nov 18 20209:01 AM EST

As we approach the end of a troubling year, UBS strategists have revealed their investment ideas for 2021. The new year is expected to mark the start of an economic recovery after an uneven coronavirus shock. Central banks have promised to keep providing stimulus, Covid-19 vaccines are set to be rolled out, and governments across the world are likely to provide additional fiscal support. All of these events have influenced UBS' investment strategy going into 2021. "Diversify for the next leg with exposure to global equities" and "rebalance out of U.S. large-caps and global consumer staples," UBS said Tuesday in its "Year Ahead 2021" report, assuming a wide-scale rollout of a coronavirus vaccine in the first six months of 2021. Investors poured into companies with large market capitalizations and consumer staples firms in recent months, given these were still working and providing services at a time when other businesses could not even open their doors due to public health measures. However, as vaccine hopes rise, UBS believes it is time to increase exposure to businesses poised to benefit from an eventual easing of social restrictions. "U.S. mid-caps and industrials should see higher earnings growth than U.S. large-caps," the bank said. UBS also believes that a Joe Biden presidency will lead to more fiscal stimulus and "more predictable policymaking." On the currency front, UBS suggested positioning "for a weaker dollar by diversifying exposure across G10 currencies." The U.S. dollar has weakened against other major currencies in recent months on the back of the massive amounts of stimulus provided by the Federal Reserve so far, the expectation that the central bank will keep its bearish tone, and on uncertainty over fiscal stimulus plans due to political divergences among policymakers. In terms of government bonds, UBS said to "diversify out of low-yielding cash and bonds," as it expects interest rates to remain low in the near-term. The Swiss bank also suggested "reallocating existing technology exposure into 5G, fintech, healthtech, and Greentech." UBS believes these areas are likely to be critically important in the coming years, describing the potential as "the next big thing." CNBC PRO subscribers can access live PRO Talks, including our Dec. 2 discussion on opportunities and risks in international markets.

A woman counts U.S. dollar bills.

Marcos Brindicci | Reuters

As we approach the end of a troubling year, UBS strategists have revealed their investment ideas for 2021.

The new year is expected to mark the start of an economic recovery after an uneven coronavirus shock. Central banks have promised to keep providing stimulus, Covid-19 vaccines are set to be rolled out, and governments across the world are likely to provide additional fiscal support.

All of these events have influenced UBS' investment strategy going into 2021.