Financial experts have warned retail investors that they will not be enjoying the same sort of returns in the coming years.

Part of the problem is that global economic growth is unlikely to hit the heights seen in the heady days before the 2008 global financial crisis anytime soon, says Mr Vasu Menon, OCBC Bank's senior investment strategist.

"Global uncertainties and impediments like unfavourable demographics, low productivity, excessive debt and tighter financial-sector regulation could cap growth prospects and we could see several years of muted growth in the future," he notes.

Mr Menon adds that the continued slowdown in China and excess capacity in the country is another factor that could hurt growth.

"The emergence of a new normal where global growth is low by historical standards means that strong double-digit investment gains may be hard to come by in future and investors should moderate their expectations going forward and perhaps be prepared for single-digit gains," he says.

Mr Daryl Liew, Reyl Singapore's head of portfolio management, notes that the outlook for this year is rather uncertain, because it depends on what US President-elect Donald Trump ultimately ends up doing.

"Trump's win has already sparked off a big rotation both across and within asset classes, with bonds selling off and cyclical stocks surging. This shift could have further legs to run if his reflationary policies take root. However, it also has the potential to fizzle out if his policy moves do not have the desired effect."

He advocates holding a diversified portfolio that is slightly overweight on equities.

Mr Liew says: "We have reduced our underweight position in US equities and continue to find interesting investment opportunities in Europe and Japan.

"Asia and emerging markets may come under pressure if the US dollar continues to strengthen, which is why one has to be selective in which countries and stocks to be exposed to."

Mr Anthony Joseph Raza, head of multi-asset strategy, at UOB Asset Management, says that for the first quarter of this year, the firm has raised its equity allocation to overweight from neutral and lowered fixed-income from overweight to underweight. "We remain neutral on commodities for the first quarter and are also neutral on cash. We expect the reflation theme to persist as a key theme in investment markets in 2017."

EQUITIES

Mr Raza says that rising rates should encourage a rotation from fixed income to equities, which should in turn support equity prices.

"Also, better wages and headline growth numbers could further strengthen the emotion-fuelled consumer confidence which supports investment. For the year, we would expect high single-digit levels of returns," he adds.

Mr Menon notes: "We see significant political uncertainty in Europe, with key elections in France and Germany which could test the unity of the European Union.

"Nevertheless, we have upgraded our call on US equities from underweight to neutral because of the more defensive traits and also because Trump is likely to pursue expansionary fiscal policy which could benefit US equities."

FIXED INCOME

The global outlook for the past couple of years has been one of low growth and low inflation, which helps fixed-income products perform but inflation and more normal interest rates will likely hinder this, says Mr Raza.

"We expect Fed rate hikes will be modest (three this year) and that long-term rates will continue to trend higher. But we think the rate increases will be slow enough that the full-year performance for fixed-income markets will remain positive at low single-digit levels," he adds.

Mr Menon says that despite higher US interest rates, OCBC still sees opportunities in bond markets, especially among corporate bonds offering attractive yield.

"The high coupon on such bonds should help buffer and insulate them from rising US Treasury yields," he notes.

He adds that there are three things to bear in mind when investing in bond markets to reduce risk.

"Firstly, given the potential for higher US interest rates, investors should focus on bonds with a shorter tenor as such bonds are less affected by higher interest rates, compared with longer-dated bonds.

"Secondly, it may be best to invest in a portfolio of bonds through a unit trust rather than buying individual bonds as many individual bonds require a significant investment outlay and can expose investors to concentration risk. Finally, it is absolutely imperative to buy only into bonds with decent credit fundamentals to reduce default risk."

REAL ESTATE

Property prices here have fallen almost 11 per cent in the past three years, notes Mr Sam Phoen, co-founder of investment-management firm Wateram Capital. He believes that some cooling measures could be relaxed if the pace of price falls picks up speed in the next couple of quarters on the back of more job losses, higher interest rates and slow GDP growth.

"That would lower the transaction costs for property transactions and tempt cash-rich Singaporeans back into the market. As the price gap between prime areas and the suburbs is increasingly narrow, one could expect any rebound in prices to be led by those in the central region or just outside central region," he says.

Lorna Tan