Neither equities nor bonds can be considered low risk given the huge amount of uncertainty that pervades every asset class, according to industry experts. 

Since the fate of the markets is in the hands of politicians, leading IFAs claim investors are faced with a near impossible situation. 

"We are in a position at the moment where it’s difficult to define risk," said Patrick Connolly, head of communications at AWD Chase de Vere. "Riskier assets seem good value and less riskier ones poorly priced. It’s difficult to know where to invest to avoid risk."  

FE research showed earlier today that funds with more fixed interest exposure have done well over the past five years, as investors avoid taking on risk.

However, all that could change if there is concerted quantitative easing by major central banks such as the ECB, which would be likely to cause a surge in riskier assets such as equities. 

Mark Dampier, head of research at Hargreaves Lansdown, thinks the macro situation is so difficult to call that investors may be better off holding cash at the present time.

"Trying to advise on a portfolio is very difficult," he said. "You can try to go for funds with very different exposures to hedge the different risks."

"I think cash is a great investment right now. Not only is it not going to lose you 20 per cent if the market has a bad year, but it also means you have money to invest if the euro breaks up, the markets go down and we see a massive buying opportunity." 

Should quantitative easing occur, Tim Cockerill, head of collectives research at Rowan Dartington, believes investors with a high degree of equity exposure will benefit most.

"Interestingly, trackers could be among the better performers, as many funds have positioned themselves defensively and the likelihood is that less defensive stocks perform better as the outlook for them improves – banks, for example," he explained. 

"On this basis, ishare FTSE 100 or ishares S&P 500 would be worth looking at. Otherwise funds which have exposure to banks and the miners should see the greatest immediate impact – Liontrust Macro UK High Alpha has high mining exposure and Fidelity Special Sits has high financial exposure." 

Connolly agrees that quantitative easing could be the catalyst for a rally in undervalued equities. 

He believes the US and emerging markets are likely to take off faster should investors regain their appetite for risk. 

Connolly likes JPM Emerging Markets and First State Global Emerging Markets, and for exposure to America he has high hopes for JPM US Income. 

However, even if quantitative easing does occur, there is some doubt whether this will have a positive impact on any asset class. 

Damien Fahy, head of research at Fundexpert.co.uk, says any further use of the stimulus measure is unlikely to have the wished-for positive effect on markets, as research shows the law of diminishing returns applies. He also says it would be unlikely to solve the crisis. 

"More QE from central banks masks the underlying problems, it doesn’t solve them. Ironically liquidity injections such as the LTRO have raised the stakes as banks have swapped capital for risky sovereign debt," he explained. 

Dampier thinks it is nigh-on impossible to second-guess the effect of quantitative easing, and would feel more comfortable holding traditional safe haven assets and income-paying products. 

"If the world economy continues to slow down and China has a hard landing I would expect us to experience a deflationary environment. We’ve already seen some sign of that with falling oil prices," he said. 

"All the debt around is stopping people from investing. Banks are hoarding huge amounts of money. QE would store up a huge dam that would burst at some point and it is then that you might see inflation." 

"I would still like gold in those circumstances and high yield stocks. Otherwise it is a matter of finding those companies like Apple which make something people are willing to pay for in an environment when they’re cutting back on their spending."