YOU are likely to be a few days into a new lifestyle of healthy eating, regular exercise, and a new can do attitude - sound familiar? asks Gary Welford, assistant investment manager at Brewin Dolphin.

As we all refresh our view on life, and get over the disappointment that more of us are not floating around on Back to the Future style hoverboards, it is also the time of year for financial analysts to take a fresh look at the markets and make predictions on the outcome for the year ahead.

A fresh start, a new beginning and usually a timely reminder that only well diversified portfolios perform consistently over the longer term.

Before we look forward, let’s take a quick glance back at one of the surprises of 2014, the strength of the Fixed Income market. Geopolitical concerns, global growth woes and European debt fears, to name just a few of 2014’s issues, resulted in demand for the relative security of Fixed Income investments, despite the US Federal Reserve unwinding its aggressive bond buying program. Fixed Income investments have an important role within portfolios, however, their attractiveness will be hard to maintain in the face of rising interest rates in developed economies. For this reason we continue to favor equities over bonds in 2015 whilst acknowledging this hurt performance in 2014.

Growth in Gross Domestic Product is clearly still very weak in a number of major economies while some others are seeing their growth faltering. We see an increasing number of less developed economies actually lowering interest rates and potentially employing unconventional monetary measures in 2015. From an investor perspective the conditions remain benign. Away from policy errors, we are seeing a synchronous expansion in employment across the majority of major economies and at the same time falling input costs are going to improve margins for companies and disposable incomes for individuals. As a result we expect to see weaker growth, and consequently weak revenue growth, however, reasonable company earnings, leading to comparatively attractive equity returns.

We expect the price of gold will continue to come under pressure. We believe that the main cause of the rout in mid-2013 was lower inflation expectations. Given our house view of low inflation expectations and very modest increases in nominal interest rates, our best guess is that gold continues falling in absolute terms.

We forecast the Brent oil price to rally but not until the second half of 2015. The decision by OPEC not to cut production combined with the decision by Saudi Arabia to reduce their official selling prices of oil has damaged oil traders’ trust in OPEC. However, unlike the market’s swift reaction to falling oil prices, we think that the producers’ reaction will be more protracted. This is partly due to the time-line of oil projects which involves making investment decision several years ahead of first production. We remain confident of a second half bounce in part, due to the increased likelihood of 15-30 per cent of US shale production either being shut-down or mothballed and lower production from Russia and other relatively high cost operating areas, including the North Sea. In addition, several oil and gas companies inside and outside the US are close to, or already have broken their bank covenants and will be forced to cut back on capital expenditure.

In summary, the large macro calls are, equities over bonds, developed equity markets (UK & US) over emerging equity markets, continued USD strength and mixed fortunes in the commodities market. European and Asian equities will no doubt continue to keep us guessing and will warrant only a small portion of our discretionary clients’ portfolios.

We wish you all the best for 2015.

The opinions expressed in this article are not necessarily the views held throughout Brewin Dolphin Ltd. No Director, representative or employee of Brewin Dolphin Ltd accepts liability for any direct or consequential loss arising from the use of this document or its contents. Any tax allowances or thresholds mentioned are based on personal circumstances and current legislation which is subject to change.

Gary Welford is an assistant investment manager at Brewin Dolphin, Newcastle. gary.welford@brewin.co.uk