UBS shares 3 ways to shore up your portfolio as Iran war risks remain

• UBS is cautioning investors about remaining risks from the US-Iran conflict resolution.
• Wealth management CIO Mark Haefele suggests avoiding exposed global markets like Europe and India for now.
• He also said to consider buying oil and short-duration bonds.

Stocks have gotten their mojo back this week after a rough period, lifted by hopes over an Iran war resolution.

But UBS is cautioning investors about getting too comfortable.

"While signs of a willingness to negotiate are positive, hurdles remain before an actual end to the conflict," Mark Haefele, the CIO of UBS Global Wealth Management, said in a note on Tuesday.

"A resumption of energy flows may take longer still," he continued. "We note that a sudden end to the conflict, while leaving the status of the Strait of Hormuz unclear, may also leave energy prices higher for longer."

While Haefele is largely bullish through the end of the year, he recently outlined a few ways to short up portfolios, should near-term volatility from the war persist.

1. Stay away from exposed global stock markets

First, Haefele picked out a few global markets that he recently downgraded to a neutral rating: Europe, the eurozone, and India.

Both regions are especially sensitive to the price of oil, making them among the most vulnerable areas if the Strait of Hormuz stays closed, and if oil prices stay elevated.

Certain pockets within Europe still look strong, however, he said. In particular, he now rates European healthcare stocks and Swiss stocks as "Attractive" due to their defensive nature.

The iShares MSCI Switzerland ETF (EWL) is a US-listed fund that offers exposure to Swiss stocks.

2. Add to short-duration quality bonds

Second, Haefele said investors should consider taking advantage of short-duration bond yields now, since interest rates are likely headed lower at some point.

"We expect a decline in yields either if markets begin to price a negative growth shock or if the conflict is resolved and short-term rate hike expectations are priced out," he wrote.

The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) and the Vanguard Short-Term Bond ETF (BSV) offer exposure to this trade.

3. Buy the dip in oil prices

Third, Haefele said to consider buying oil if your portfolio needs exposure to alternative assets, with the price of Brent crude per barrel down roughly 10% from where it settled on Monday.

"We believe oil prices will likely rise again if the Strait of Hormuz remains closed, or if the process of restoring energy flows proves more protracted than hoped," he wrote.

The United States Brent Oil Fund (BNO) is one way to gain exposure to oil prices.