Can a global equity fund offer diversity?

“Our sense is that assets such as equities, have already discounted the weaker economic environment. Three important factors continue to support the case for equities: liquidity conditions globally remain favourable as central banks continue to ease policy; valuation for equities remains supportive; and positioning and sentiment continue to highlight investors’ loss of expectation with the asset class,” he says.

“The main factor that highlights caution on equities is that the improvement in economic momentum is taking longer than most expected. However, it does appear that equity markets have, to a large degree, already discounted much of this disappointment.”

In addition, Andrew Milligan, head of global strategy at Standard Life Investments, predicts the global economy will start to move forward in the second half of 2012, after the first six months were plagued by eurozone concerns and the slowdown in China.

He explains: “In spite of these risks there are many encouraging aspects to the world economy, coming from the US in particular where consumer spending power is well underpinned, the housing market looks to be in recovery mode and much of manufacturing is in good shape.

“In Japan there are signs that GDP could grow closer to 3 per cent this year. Even in the UK, where household disposable incomes have been squeezed by unemployment, the situation is improving, with the jobs market holding up better than expected and consumer inflation falling back.”

Nyree Stewart is deputy features editor at Investment Adviser