Wealthy investors are cautious on 2020 but optimistic on the decade ahead, the latest UBS Investor Watch survey has found.

More than 80% of respondents were interested in aligning their portfolios with long-term mega-trends, according to the research.

According to the survey, which polled more than 3,400 wealthy investors in 13 markets, 79% of respondents said markets were moving towards a period of higher volatility.

Seventy-two percent characterised the investment environment as more challenging than five years ago.

Sixty-six percent said markets were driven more by geopolitics than by fundamentals with the US-China trade conflict attracting the most concern, of 44% of respondents, with domestic politics (41%) and the US election in 2020 (37%).

Overall, wealthy investors still hold 25% of their portfolios in cash, far higher than UBS’s recommendations, with 60% saying they would consider increasing that level further.

However, despite their reservations on 2020, 69% of respondents said they were still optimistic on investment returns over the decade ahead.

Eighty-eight percent expressed interest in aligning their portfolios with anticipated investment mega-trends - in line with UBS’s thematic Longer-Term Investment offering.

The ageing population was most often identified as a mega-trend, by 87% of respondents.

Eighty-two percent also expressed interest in sustainable investing and 45% said they already held sustainable investments.

UBS says this “positive attitude towards longer-term and sustainable investing” was most in evidence among young and millennial investors aged 18-34.

Eighty-four percent said they were “highly interested” in aligning their portfolios with mega-trends and 83% expressed interest in sustainable investing, compared with 30% of those aged 51 or older in both instances.

Paula Polito, client strategy officer at UBS Global Wealth Management, said: “The rapidly changing geopolitical environment is the biggest concern for investors around the world.

“They see global interconnectivity and reverberations of change impacting their portfolios more than traditional business fundamentals, a marked change from the past.”

In the EMEA (Europe, Middle East and Asia region investors were said to have ranked in the middle of the pack, both in terms of their caution on 2020 and their interest in aligning with longer-term trends.

However, a greater proportion expressed optimism on returns over the decade ahead (72% versus a 69% global average).

Also 88% expressed interest in sustainable investing (versus an 82% average) and 50% already hold sustainable investments (versus a 45% average).

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