The global economic environment will remain challenging and uncertain during 2013, but it will also offer opportunities for pension fund investors.

Threadneedle chief investment officer Mark Burgess said that some of the risks that drove significant headwinds in 2012, such as the Chinese leadership transition and a complete disintegration of the eurozone, are perhaps less of a concern than last year. “Moreover, in the eurozone, there is now at least recognition that very tough decisions lie ahead. As a number of European politicians have indicated, they all know what to do to address the debt crisis, they just don’t know how to get re-elected if they do it."

He added: “We continue to expect the economic outlook to remain challenging in 2013. The overhang of national debt will cast a very heavy shadow for an extended period, and for this reason we remain cautious on companies that are heavily reliant on government spending."

In the US, more details of measures to tackle the fiscal cliff are expected, while the Chinese economic slowdown seems to have bottomed.

With regards to the eurocrisis, Neptune Investment Management investment director and head of European equities Rob Burnett expects more widespread acceptance that Europe is making a significant positive structural adjustment. “Germany will continue to lead the European economy but investors are likely to unwind more of the discount in the periphery of Europe. Economically, the EU is on track. The key risks are political – it will be important to keep the Greek government in power and prevent major shifts in policy in Spain and Italy. Provided political risks can be contained, both Spain and Italy may not need to sign a Memorandum of Understanding (MoU) to get ECB assistance in 2013.”

Schroders head of multi-asset investments Johanna Kyrklund added: “The good news is that the political uncertainty that has weighed on market sentiment is gradually lifting. We think we are at ‘the end of the beginning’ of the European crisis.

"Over the last two years investors have been seeking to gauge who was in charge, what their reaction functions were and what their willingness to backstop the system was.

"We are now at a point where we know we are in the hands of the Germans and the European Central Bank (ECB), that the Germans want deeper union and, based on Mario Draghi’s comments, that the ECB is willing to step in as required. We may not like Germany’s pro-austerity stance and the ECB ‘put’ may be at a strike which is lower than we would like, but some of the extreme political risk is reduced and the situation is now uncertain rather than inscrutable.”

Kyrklund believes that low interest rates and anaemic growth will continue in 2013 and added: “In this environment a strategy which favours higher quality stocks and is focused on enhancing yield through asset classes like high yield debt should continue to pay off, but the absence of a convincing, robust recovery will continue to weigh on more cyclical assets.”

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