As global bond yields remain persistently elevated, UBS is shifting its investment focus toward Asian emerging market debt, according to the bank's latest positioning commentary.
The firm believes current yield levels are unlocking fresh opportunities across both credit and fixed income markets.
Adrian Zuercher, Co-Head of Global Asset Allocation and Co-Head of Global Investment Management for Asia Pacific at the UBS Chief Investment Office, said on CNBC's "Squawk Box Asia": "We have actually started to make a clear shift toward Asian emerging markets because we see value in credit and fixed income in this high-yield environment."
Zuercher noted that the robust macroeconomic backdrop is underpinning performance in emerging market bonds, with Asian technology sector debt — particularly high-yield instruments — having outperformed the broader market over the past several months.
He also pointed out that today's high-yield bonds boast "much better quality" compared with what was available a decade or fifteen years ago, which is another factor driving UBS's increased attention to Asian emerging market fixed income.
In the current global environment of elevated yields, UBS believes Asian emerging market bonds can deliver attractive returns while benefiting from a relatively strong macroeconomic foundation.
Gold Maintains Its Role as a Key Diversifier
Turning to commodities, Zuercher argued that gold remains a valuable tool for portfolio diversification.
"For gold, it's absolutely a good trading environment," he said, highlighting that the U.S. dollar appears structurally weak from a long-term perspective, which provides continued support for the precious metal.
For investors seeking additional risk diversification through commodities, Zuercher suggested that broader commodity exposure deserves consideration.
He explained that geopolitical tensions in the Middle East have driven oil prices higher, while the artificial intelligence boom is fueling increased demand for copper and other industrial metals.
"Broader commodity exposure can really help, and — if oil prices rise further — it can also limit some downside risk," he added.