Global economic uncertainty may dredge up emotions around investing but switching portfolio strategies and other panic-driven decisions impede wealth accumulation, UBS Wealth Management said.
"This is not the time to change long-term strategic benchmarks," UBS Wealth Management head of investment strategy and consulting George Boubouras said.
Boubouras said in a report that conservative, moderate and aggressive strategic asset allocations, including equities, helped investors build wealth.
He said Australian equities appeared oversold, and UBS Wealth Management's tactical asset allocations remained overweight cash and domestic equities.
"One-year forward [price-earnings ratios] under 10 times are pricing in a worst-case scenario, which is at odds with the earnings momentum and profile," he said.
Boubouras said domestic equities' dividend yields were compelling relative to 10-year bond yields, with the former headed towards 5 per cent and the latter headed towards 3 per cent. Grossed-up dividend yields - which factor in franking credits - were nearing 7 per cent.
"Focus on quality income stocks. Dividend strategy is a low-beta theme; chase income certainty if higher market volatility is a concern," he said.
Meanwhile, Perpetual said quality assets, be they stocks, bonds or other assets, were the only way to minimise risk in the face of continued market volatility.
"Regardless of whether investors invest in equities, credit securities or other assets, the best defence against market volatility is quality," Perpetual head of investment markets research Matthew Sherwood said.
"There is little doubt that markets will remain volatile but investing conservatively in proven business models may provide more stability in portfolios in what could be a somewhat uncomfortable ride," Sherwood said in a report.
He said listed companies with proven business models were the best bets. Signposts of quality companies include strong balance sheets and consistent cash flows, as well as reliable growth in earnings and dividends.
However, he said high yields alone were not enough in risky times because the highest-yielding investments over the past 28 years had delivered the lowest levels of income growth.
"For example, the interest rate in the cash market has averaged 8.7 per cent since 1983, but the income received each year had fallen by 2.2 per cent a year.
