- UBS says its ultra wealthy clients are moving out of stocks to invest in more illiquid areas.
- Some of these include residential real estate and private equity, the Swiss bank said in a report this week.
- Josef Stadler, head of family office at UBS Wealth Management said many of its ultra wealthy clients took loans to invest in stock markets.
- Stadler said: "They bought a billion-plus of those equities to rebalance. And they made a lot of money."
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The world's largest wealth manager said its ultra wealthy clients are now done with equities and are looking at less liquid areas to invest in.
UBS, the world's largest private bank, also known as a "fortress bank of billionaires" said during the slump in stock markets some of the bank's richest clients took loans to invest billions in stock markets.
But now having made profited massively, they are now done with the equity space and looking to invest that money in private assets and illiquid assets.
In an interview with Reuters, UBS' head of family offices Josef Stadler, said: "We had record loans written during the middle of March and the middle of April, of significant family offices who asked us for balance sheet and then went into the market."
Stadler added: "They bought, for example, US equities, but they didn't buy $50 million. They bought a billion-plus of those equities to rebalance. And they made a lot of money."
UBS said its richest clients who are managed by family offices may invest in residential real estate, private equity, to name a few.
While these predictions apply for all clients, Stadler thinks these bearish predictions apply most strongly to its wealthy clients in Asia and expects stock markets to lose ground for the rest of 2020.
"Many family offices have also added to their cash and gold allocations," UBS' Global Family Office Report noted Thursday.
"The retreat to cash looks set to be temporary, with 26% indicating they will lower cash reserves in the next 2-3 years, but gold could be a long-term beneficiary, with 45% saying they will increase their exposure to the precious metal," it added.
UBS said in its report that more than two thirds of family offices view private equity as a key driver of returns.
Less than half of family offices expect equities to fare well over the long-term, the world's largest private bank said in the report.
Stock markets took a beating in March as the Western world took full notice of the coronavirus crisis.
The S&P 500 touched a low of 2237.40 on 23 March. Since then, stock markets have staged a dramatic recovery in part due to the easing of lockdowns and optimism on progress of vaccines as investors pinned hopes on a V-shaped economic recovery.
The S&P 500 is currently trading around 3215.57, more than 40% higher than March's lows.
The wealth of US billionaires has also skyrocketed since the start of the pandemic.
A report by the Institute for Policy Studies shows between March 18 and June 11, total US wealth grew from$2.95 trillion to $3.58 trillion.
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