A 'Moderate Risk Portfolio'
For a typical 'moderate risk' portfolio, Davies suggests the following: 50-60 percent exposure to equity, 35 percent to fixed income, 5-10 percent to gold and commodities, and the remainder in cash.
There is no need to hold large amounts of cash, he said, because the underlying market fundamentals point to a solid economic recovery.
“If you look at corporate earnings...it's actually all bubbling along very healthily underneath all the noise that we've got at the sovereign level.”
Davies said he believes investors should hold gold as demand for the precious metal is rising in developing countries.
He added the precious metal is also a good hedge against inflation and any potential weakness in the U.S. dollar, especially with volatility creeping back in equity markets.
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