With oil nearing soaring and the Strait of Hormuz closed, UBS Global Wealth Management CIO Mark Haefele has published an investment roadmap. Here is what it says.
With the Strait of Hormuz effectively closed and spot Brent crude trading higher at $90 per barrel, UBS Global Wealth Management Chief Investment Officer Mark Haefele has published a CIO Alert dated March 9, laying out how investors should position through the crisis in a report titled an Investors Guide to Navigating the Conflict. The report covers every major asset class — equities, bonds, currencies, gold, and commodities — and offers a framework for managing portfolio risk depending on how the situation evolves.
Global equities are still trading within 5% of all-time highs, but the report notes “rising volatility shows us investors are growing increasingly uneasy about the risk that oil supply disruptions could prove longer lasting.”
Stay Invested, But Have a Plan
For investors who are well-diversified and have the temperament to stay invested for the long term, UBS’s core recommendation is straightforward. “Our recommended strategy is simple: stay invested,” the report states. “We do not think that this crisis will have a meaningful impact on where markets trade over the longer run.”
For those looking to manage risk more actively, UBS recommends defining a plan in advance rather than reacting to each day’s headlines. “Risk management is never easy in a fluid situation that could credibly reverse tomorrow,” Haefele writes, warning against the cycle of inaction and describing the worst-case personal investing scenario as “saying everything is fine on Monday, panic selling on Tuesday, and seeing the situation reverse on Wednesday.”
The framework UBS recommends: ask “if the conflict persists for six months and oil remains elevated, what would I want my portfolio to look like?” — then work backward, spacing out the required moves into regular intervals. “While far from a perfect plan,” the report says, “it is a way to gain some control.”
Three Actions
UBS says add hedges to equity downside and safe-haven currencies; building diversification through “quality bonds, gold, and broad commodity exposure”; and cut cyclical exposures in equities and risky credit, “or allowing exposure to reduce naturally by not actively rebalancing.” The report notes that UBS has been following this roadmap with its own positioning and will continue to do so “in the knowledge that the last time we reduce portfolio risk will probably come just before a rebound.”
On Stocks
“We do not believe equity investors should run for the hills, but nor should they be reflexively buying the dip,” Haefele writes. “Trading geopolitics has historically been a recipe for failure.” UBS’s base case remains that the crisis resolves within weeks — “the median length of a geopolitical drawdown in the S&P 500 is 16 days” — with markets expected to be “higher by the end of 2026.”
At the same time, the report cautions that “not every geopolitical crisis has been resolved in a matter of weeks. Now is not the time to be bold.” The specific advice is to use this period to diversify concentrated positions, noting that once the crisis resolves, “the market will quickly revert to some of the issues in focus prior to the strikes on Iran, including fears about AI competition.”
On Bonds
Despite the sell-off in government bonds since strikes on Iran began, UBS maintains that “quality bonds have an important role to play in diversifying portfolios,” expecting yields to fall if recession fears build. The focus is on medium-duration bonds, given “potential fiscal risks for longer-dated debt.”
On the Dollar
“While the conflict persists and oil prices remain elevated, we expect the US dollar to strengthen relative to the euro,” the report states. The US’s status as an energy exporter “partially insulates it from direct economic risks from higher energy prices,” making dollar positioning “a potential way for investors to hedge portfolios against the risk of a longer-lasting crisis.”
On Gold
Gold has underperformed during this crisis, weighed down by a stronger dollar and profit-taking. UBS expects a reversal. “We expect gold to resume its function as a geopolitical hedge soon,” the report states, projecting prices to rise to $6,200 per ounce by June 2026, supported by lower real yields and continued central bank demand.
On Commodities
UBS remains constructive on broad commodities beyond the immediate crisis. On industrial metals, the report highlights copper, citing “persistent demand growth and ongoing supply constraints,” and suggests investors “may wish to capitalize on any downturns in industrial metals to strategically increase their allocations.”
The Macro Risk
UBS sets out specific inflation thresholds. “If spot oil prices remain above $90 per barrel for more than six months, US inflation would rise by 60 basis points in 2026. If spot oil prices are above $120 per barrel for more than six months, US inflation would rise by 150 basis points” — raising the possibility of central bank rate hikes and a repeat of the 2022 episode. The report uses forward oil prices as its primary indicator for judging how markets are assessing the probability of the Strait fully reopening — as long as forward prices stay contained, markets are still pricing a temporary disruption.
