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Which companies will benefit first in the COVID-19 recovery: UBS Global Wealth Management

Laura Kane, head of Americas Thematic Investing at UBS Global Wealth Management, joins Yahoo Finance’s The First Trade with Alexis Christoforous and Brian Sozzi to discuss what sectors her team is keeping a close eye on.

Video Transcript

BRIAN SOZZI: Laura Kane, Head of Americas Thematic Investing at UBS Global Wealth Management, is here with us now. Laura, big fan of Thematic Investing. Is there a theme that you're putting forth to clients right now that not a lot of other people out there are talking about? Sure, so much focus on the election, rightfully so, but what are you telling clients?

LAURA KANE: Sure, so I would say there's a few different things we're recommending, some more in the near term and some more long term. So on the near term side, we're focused on this theme of reopening America, so we're looking at those companies that we feel will benefit first in the recovery. So that really spans multiple sectors, everything from medical devices to auto parts, retailers, to quick service restaurants, as well as some digital plays, so some companies that we feel will be in a better position coming out of this pandemic. So that's one.

You mentioned the election, we also have a theme called Campaign Warriors where we focus on those companies that we feel will be well insulated from political uncertainty and volatility heading into the election. So there, we focus on companies with pricing power, for example, within the consumer segment. We also focus on the exchanges versus the banks within financials, so there's a lot you can do in the near term from a thematic perspective.

Looking a little bit longer term, so, of course, this story has been about these digital plays, areas like e-commerce and fintech that have been accelerated by the pandemic. So we continue to like a number of those themes. Some of the areas less talked about, I would say cybersecurity is going to increase in importance, and we also see a number of long term health care related themes, so whether that's health care technologies like telemedicine, but also some innovative treatment capabilities within areas like oncology and genetics. So there's really a wide variety of different themes that we're focused on right now, and that really allows our clients to incorporate these themes to add to the diversification of their portfolios during this rather uncertain time in the markets.

ALEXIS CHRISTOFOROUS: Laura, I'm curious if housing plays into any of the themes that you're looking at right now, because we just got some new data out on the housing market. Existing home sales up 2.4%. You've got a lot of Americans looking for homes, inventory very, very tight right now. There are rarely been fewer homes for sale, so where does housing fit into any of your themes?

LAURA KANE: Yeah, so as you said, right now we have super low interest rates, and this has been a boost to the housing sector overall. In terms of how it plays into our themes, I mentioned our theme of reopening America, so we do have some home improvement exposure within that theme. So that's an area that we continue to like both because of how well it's done during the pandemic with people staying home and spending more time investing in their homes and their property, but also because of these low mortgage rates and the boost to the housing sector overall. So it is an area that we like. I would say broader real estate perspective is a different story. If you look at certain segments of publicly traded real estate like the retail and office space, those areas, of course, are more challenged, so that does play into some of our thematic thinking as well.

BRIAN SOZZI: Laura, in the 30 or so seconds we have left, you mentioned you like health care and health care technology. If the ACA is repealed, how does that influence those plays?

LAURA KANE: Sure, so that could certainly have some negative headwinds for managed care companies. So, you know, currently, we do see that the managed care segment overall is facing some uncertainty, you know, even outside of potential ACA repeal, but just in terms of the election overall, that's a subsector that's very much caught in the crosshairs of election volatility. So there are some other areas where we kind of prefer right now, so we focus on life science and tools, as well as pharma, which, you know, is also caught up within the election, but we feel that the valuations are cheap enough to kind of justify taking on some of that risk. So I would say, you know, it's not one of our-- managed care doesn't happen to be one of our preferred areas within the health care segment at this current time.

BRIAN SOZZI: All, right Laura Kane, Head of Americas Thematic Investing at UBS Global Wealth Management, real great insight.

LAURA KANE: Thank you.