On a global level, emerging market equities might have the most upside, according to Paul Danis, head of multi-asset strategy, Brewin Dolphin.
Mr Danis says: “The global growth outlook is not great due to demographics, the low interest rate starting point and globalisation headwinds.
“US equities also face the longer-term headwind in the form of structurally high profit margins, which may come under pressure on the back of a political shift to the left that results in policies implemented that favour workers over business; and elevated valuation multiples. Equities are still likely to outperform bonds.
Changing demographics
Changing demographics will also play a big role in investors’ long-term allocation strategy.
The west has an ageing population, while in emerging markets there is an exploding younger demographic.
Mr Lowcock says: “Demographics will play a very significant role in investing.
"That points to Asia and some emerging markets where they have still got a young growing population whereas the west has ageing populations, so you would expect an increasing exposure.
"But you would caveat that with what we have seen over the last decade.
"That demographic issue has still been true but Asia and the emerging markets have not led the world at the financial crisis.
"That has been America. Even though you have an ageing population there, you have a wealthy consumer.
"Demographics will play an important role, but it is how you get exposure to those countries that lead.
"You look at what will the demand be from an ageing American population, but you also need to appreciate that India and Indonesia have large young working populations that are growing, same with countries like Nigeria and across Africa.
"You have to be careful about putting all your eggs in one basket."
Mr Lowcock says another area to consider is ethical investing; looking at how younger generations will consume and expect companies to behave and how that will impact on investing as well.
Real assets, which includes precious metals, commodities, real estate, land, equipment, and natural resources have grown in popularity, as they have a relatively low correlation with stocks and bonds.
Mr Lowcock says the opportunities in real assets tap into the low interest rate environment, where people are looking for yields better than they get on cash or bonds, but they do not necessarily want the full risk of a full equity.
Inflation
He adds: “Real assets are linked to inflation. Even with inflation at 1.7 per cent it is above the average rate on cash and above a lot of rates you get on bonds.
