Investors should go overweight on equities, but stretched valuations mean looking outside the U.S., Katie Koch, a portfolio management chief at Goldman Sachs Asset Management told CNBC.
"We see more upside in Japan, and emerging markets," Katie Koch, the global head of client portfolio management at GSAM, said, citing high valuations in the U.S.
"U.S. valuations are in their top decile of being the most expensive."
But Koch advocated "bravely stepping away" from global benchmarks and being more selective, adding that it's particularly important in emerging markets, where she advised increasing exposure.
"In emerging markets, big picture, you're getting access to more attractive top line growth and you're getting it at a discount of about a third relative to the developed world," she said.
"At the same time, most investors around the world are underweight. We think they should correct that positioning."
But, thanks to the dominance of state-owned companies, emerging markets benchmarks are not without their problems, she said.
"State-owned enterprises comprise 30 percent of the standard emerging market index. They're actually up to 70 percent of China," Koch said. "The issue with state-owned enterprises is they're very good news for the citizens of the countries, but they act in the interest of the sovereign and not minority shareholders."
As an example, Koch noted that GSAM invests in China, but looks "aggressively" outside the benchmark index. That index tends to focus on "old economy" companies, such as banking, manufacturing and industrial players, she said. Instead, GSAM looks at China players in the "new" economy, such as e-commerce, as well as secondary beneficiaries including logistics and shipping, she said.
GSAM also is interested in travel plays, with Koch noting that the number of Chinese nationals possessing a passport, currently standing at 4 percent, is expected to grow.
Within the U.S., Koch sees selective opportunities, such as healthcare stocks, which have been beaten down in the lead-up to the election.
Additionally, she's looking at U.S. banking shares, which she doesn't think are fully pricing in expectations for the U.S. Federal Reserve to increase interest rates likely twice this year. Koch advised looking at big U.S. banks with strong balance sheets, which would be well-positioned to benefit from higher interest rates.
For investors looking for income, Koch said there are attractive yields in some parts of the equity market. She pointed to U.S. energy infrastructure, real-estate investment trusts (REITs) globally and European equities, which are offering "pretty attractive" yields of around 4 percent.
—By CNBC.Com's Leslie Shaffer; Follow her on Twitter @LeslieShaffer1