Please invest, please

February 4, 2009

Hardly suprising that investment funds want their clients to cough up some money. It is, after all, how they get paid. So an appeal to pension funds from UBS Global Asset Management to stop sitting on the fence is not entirely pro bono. Nonetheless, a new note from the firm that trustees are actually risking things by hanging on to large cash reserves is worth a run through.

First, it says, there is the danger that they will lose out on any market recovery. UBS reckons stocks are well priced with high expected returns. It did not say so, but people sitting on cash in late November to early January missed a more than 25 percent rally in world stocks.

Second, UBS reckons hanging on to cash is not a good move given the amount of higher-yielding low-risk investments currently available. Some investment grade corporate bonds are trading at 10 percent-plus yields.

Finally, UBS says that in their aversion to risk pension funds should be careful not to make things worse. If asset values don’t go up as much as liabilities then pension fund deficits widen.

UBS’s message is basically this: Get out from under the mattress.


One comment

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YOU & US…to most investors, at this moment in time, is all about TRUST and even though UBS is positioned well to benefit from any upswings and has lots of market savvy. YOU will just have to wait, along with the rest of Wall Street, until US feels that the “MOJO of the Market” returns. The question everyone is asking: ” How low can it go?”. At a time where one News Story can drop the market several hundred points…its just too dicey to invest in anything…hold those greenbacks…they will buy more later is the sentiment…and UBS, like the rest, can’t do anything about it.

Posted by Robert Thomas | Report as abusive