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- UBS CEO Sergio Ermotti said financial markets have grown complacent despite mounting geopolitical and economic risks.
- Wealthy investors are diversifying their portfolios, but UBS sees no wholesale retreat from U.S. assets or the dollar.
- Ermotti expects inflation to keep interest rates higher for the foreseeable future as major central banks tighten policy.
Sergio Ermotti, chief executive officer of UBS Group AG, during a Bloomberg Television interview in Zurich, Switzerland, on Wednesday, Feb. 4, 2026. UBS Group AG posted profit which beat expectations in the fourth quarter, as the bank announced a $3 billion buyback program for 2026 with the potential for more. Photographer: Pascal Mora/Bloomberg via Getty ImagesBloomberg | Bloomberg | Getty Images
UBS CEO Sergio Ermotti on Thursday warned that investors have grown complacent over the past few years, even as geopolitical and economic risks have mounted.
“There has been a level of complacency in financial markets in the last few years,” Ermotti told CNBC’s Christine Tan, adding that given the environment one would have expected considerably higher volatility.
While markets have experienced occasional bouts of turbulence, strong investment in artificial intelligence, data centers and other new technologies has helped support economic growth and financial markets, he said.
The UBS top boss cautioned that investors face an increasingly complicated environment given multiple headwinds. “New problems or new issues are emerging without any of the old ones being addressed or being closed.”
Markets face a mix of Iran and Ukraine war-driven energy and shipping risks, add to that the U.S.-China rivalry that has strained supply chains, while rising borrowing costs and stubborn inflation have created headwinds for economic growth.
That uncertainty is prompting some of the world’s wealthiest investors to spread their bets more widely rather than make large directional calls, according to Ermotti.
Hedging against uncertainty
“It’s quite difficult in this environment and not really advisable to have too many strong convictions,” Ermotti said.
UBS clients have been diversifying across sectors and geographies in recent quarters, while continuing to invest in AI and technology, he said.
Still, the overall asset allocation of UBS clients hasn’t changed materially over the past year, nor does the push for diversification amount to a wholesale retreat from U.S. assets.
Ermotti said UBS saw some money move into global emerging markets about a year ago, but characterized those flows as investors putting spare cash to work rather than actively reducing existing U.S. or dollar positions.
“It was more how excess cash was deployed rather than people back trading from the U.S. or from the dollar, so I think that narrative has abated,” he said, adding that the dollar continues to be “a reference currency.”
Higher-for-longer rates
Higher interest rates are also encouraging investors to take a more balanced approach to their portfolios, Ermotti said, as persistent inflation keeps pressure on central banks.
Inflation has remained sticky and above central-bank targets over the past year, making further policy tightening unsurprising, according to the UBS CEO. He expects major central banks including the European Central Bank, Federal Reserve and Bank of Japan to raise rates in the coming months.
“The ECB may start hike process. The Fed will follow. We do expect a couple of hikes in the next few months,” Ermotti said.
That means investors shouldn’t expect borrowing costs to quickly return to the lower levels that prevailed before the latest inflationary pressures.
“Inflationary pressure is still there, and it’s not abating, and therefore, I think it’s reasonable to expect higher rates for the foreseeable future,” Ermotti said.
