Merrill Lynch has identified US and UK equities and commercial real estate as preferred investment opportunities moving into 2012.
New research from the Merrill Lynch Wealth Management Year Ahead 2012 report recommends investors to prefer US and UK equities over the ones in Japan and Eurozone.
The Merrill Lynch Wealth Management Year Ahead 2012 report also predicts that expectations of lower inflation will reduce the appeal of commodities and suggests that commercial real estate could provide solid income opportunities in 2012.
The Merrill Lynch report recommends investors to look for investments providing ‘yield, quality and diversification’, and prefer credit to sovereign investment.
EMEA chief investment officer for Merrill Lynch Wealth Management, Bill O’Neill, said in the report:
“In selecting equities in 2012, we are recommending a focus on large cap companies with strong cash flow and growing dividends.”
The Merrill Lynch Wealth Management Year Ahead 2012 report also stresses the importance of developing a strategic framework to respond to the new ‘normal’ conditions of slow growth and higher risks.
O’Neill highlights consumer discretionary, consumer staples, and information technology as the three sectors that offer the best combination of earnings quality, valuation and alignment with the macro environment.