Strategists at the group say that, with intervention from world central banks pushing fixed income yields ever lower while equity prices continue to rise, investors need to follow these three themes if they want to succeed in the current uncertain environment.
Stay overweight equities
Dan Morris (pictured), global market strategist at JP Morgan, says that although equity prices have surged in recent months, he has not seen any suggestion that they will fall back in the foreseeable future.
"The FTSE 100 is up around 10 per cent since the beginning of the year on a total return basis, and the S&P 500 index has reached record highs," he said. "Given the range of global factors supporting stocks, the UK and US equity rallies look like they may still have room to run."
"In the US, surging household wealth bolstered by a recovering housing market along with a resilient and deleveraged consumer is positive for equities, but it is important to keep in mind that the fiscal drag stemming from Washington's deficit-reduction policies remain a headwind."
"Stocks still look cheap relative to bonds."
"US Federal Reserve policies should continue to support risk assets. Despite the strong gains so far this year, we still see ample liquidity, improving sentiment, relative valuations and resilient earnings as reasons to remain bullish," Morris added.
Industry stalwart Job Curtis, manager of the City of London Investment Trust, recently rubbished the argument that equities are now too expensive, saying he has seen prices at much higher levels during his 20-year career.
Make sure you have diverse bond exposure
Andrew Goldberg, who is also a global market strategist at the company, says that the mass liquidity the world’s central banks have injected into the financial system means investors need to diversify globally across the fixed income market.
However, he warns that yields from fixed interest assets cannot and will not stay at such low levels for ever.
"Investors should be looking for carry and flexibility with the prospect of rising yields," he said.
"For most, however, the immediate challenge remains grappling with today's painfully low-rate environment. Cash accounts are not keeping pace with inflation and investors have to broaden the search for income."
"Non-traditional sources such as global dividend-yielding equities, emerging markets debt and high yield bonds look like compelling alternatives."
FE Alpha Manager Iain Stewart recently told FE Trustnet that the artificially low yields in the bond market have made the current environment the most dangerous he has ever seen.
Tomorrow, FE Alpha Manager Bill McQuaker will tell FE Trustnet how he is playing the troubled fixed income market.
Don’t ignore the emerging markets
Goldsmith says that although the emerging markets have been a source of disappointment in recent times, it would be unwise to avoid the area completely.
According to FE Analytics, the MSCI Emerging Markets index has returned 350.75 per cent over the last decade, compared with 149.79 and 104.81 per cent from the FTSE All Share and S&P 500, respectively.
Performance of indices over 10yrs
Source: FE Analytics
However, the MSCI Emerging Markets index has underperformed against both the FTSE All Share and S&P 500 over one, three and five years.
Nevertheless, Goldsmith says that the low sovereign debt levels in this area of the market and the fact that they are historically cheap mean now could be the perfect buying opportunity.
"Emerging markets have disappointed investors on a relative basis in recent months, but they look attractively priced and poised for stronger performance," he said.
"Emerging markets have a good combination of low indebtedness and robust GDP growth and, with current valuations around 1.6x price-to-book, may represent an opportunity for long-term investors able to tolerate some volatility to achieve higher growth."
"No adviser will be able to predict the future, but understanding exactly where we are today makes you a more informed investor," he added.