Gold and oil are the investments likely to benefit from the market conditions in 2019, according to investment managers.
Jeremy Leach, chief executive of MPG, said the inflation-proofing qualities of commodities means the asset class will appeal to investors generally as the US economy continues to show signs of overheating.
In particular, he said gold is set to see a significant increase in value, possibly as high as 20 per cent, as investors seek safety in the face of continued uncertainty around equities and more interest rate rises putting pressure on bonds.
Oil prices will be boosted as a result of diminishing spare global capacity, Mr Leech added, with sanctions on Iranian exports and political uncertainty in Saudi Arabia creating additional inflationary pressures globally.
Duy Nguyen, head of advisory solutions and a chief investment officer at Invesco, said he expects equities and bonds to have a tepid year due to geopolitical tensions and higher interest rates, but he expects commodities to outperform.
He said higher inflation would boost returns for industrial commodities, while a desire from investors for diversification will boost returns for gold.
Sheridan Admans, investment manager at The Share Centre, said in 2018 globally the best performing sectors based on data provided by MSCI World were; healthcare returning 1.01 per cent followed by utilities returning minus 0.97 per cent.
The worst performing were financials returning minus 19.04 per cent followed by materials returning minus 18.84 per cent and energy returning minus 18.22 per cent.
Mr Admans said: "2018 was certainly a challenging year and any investor only making a small gain should be pleased with themselves. Volatility picked up, politics ruled and gold shone once more.
"There is a kaleidoscope of conjecture over possible directions for markets, assets and sectors in 2019 but valuations are once again looking more attractive than they were at the start of 2018. We can also be certain that volatility will persist, we will be discussing Brexit for the foreseeable future and (US president) Donald Trump will continue to polarise opinion."
David Scott, an adviser at Andrews Gwynne in Leeds, said he expects equity markets to continue to be weak in 2019, and that the majority of his clients have physical gold in their portfolios.
david.thorpe@ft.com
