“There’s a lot of noise,” Aaron Gurwitz, New York-based investment strategist at Barclays Wealth, says. He cites fears about quantitative easing, eurozone sovereign debt, US municipal credit and Chinese overheating.

“But cut through this and you see that developed economies are growing, but not fast enough to bring unemployment down, which means central banks are not going to turn restrictive in 2011.”

Meanwhile, companies have served shareholders well with strong balance sheets and the ability to grow their top line as the economy expands. The biggest constraint on cost -- labour -- is subdued, and governments in the US and Western Europe are not interfering with corporate profitability. And emerging-market growth is strong.

“Risk assets are not expensive, so investors should take risk, especially in assets linked to corporate earnings,” Gurwitz advises.

Although he views commodities as a strategic allocation, he says Barclays Wealth’s flagship portfolios are underweight: “We prefer to use our risk budget for the most attractive risk assets, equities.”

The most bullish investors should increase exposure to financials and to high-beta emerging markets such as Russia, but for them to outperform would require developed economies to recover more strongly than Barclays expects.

Gurwitz likes Japanese equities. Tokyo is changing its corporate tax structure to favour asset buying, and many Japanese companies are beneficiaries of growth in the rest of Asia.

He also likes sterling, which he says has upside potential if the dollar rallies; in such a case, he advises being short real assets.

And he recommends holding long-duration government bonds, as a hedge against the risk that the US or Europe enters a deflationary trap and a Japan-style lost decade. “I want to use bonds as a deflation hedge, not to stabilise a portfolio,” Gurwitz explains.

The difference is that short- and medium-term government bonds can be useful tools to moderate volatility, but long-term, high-quality bonds are protection against deflation. “We’ve never needed to use them as such before, except in Japan,” he adds.

His model portfolios are underweight cash and investment-grade corporate bonds, and overweight high yield and emerging market debt (mainly to capture those currency stories).

This investment outlook is likely to last so long as the US government is geared towards addressing unemployment, officially around 9.8% today.

“When unemployment falls below 8%,” Gurwitz muses, “there will be a discussion in the United States about whether the Fed should tighten monetary policy, but that’s a problem I’d love to have.”