The recent correction in global equity markets removed a lot of the froth evident in valuation levels a few months ago and, looking ahead, global equities are likely to be supported by continued accommodative monetary policies and low bond yields.
Larger hedge fund managers attracted the bulk of net cash inflows.
Unusually low levels of volatility in asset prices over the last few months are not expected to continue and investors should brace themselves for more volatility, especially if US economic data continue to improve and investors reassess interest rate expectations.
Global equities are likely to benefit most as the theme of resynchronised global growth continues playing out over the coming year, with developed economies accelerating gradually and emerging markets bottoming out.
With South African equities trading at a hefty valuation of more than 18.5 times historical earnings, investors should continue to look offshore where prices are more attractive, and to improve diversification and take advantage of potential currency weakness.