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From Christine Gaylican, Opalesque Asia:

As investors will likely demand highly liquid, sustainable investment platforms in the coming year, managers are advised to create a well-balanced divergence in macro, market and sector themes, managers from London-based ING Investment Management Europe (ING IM) and Singapore-based Lotus Capital Pte Ltd had recommended.

Cautiously optimistic that more signs of a global economic recovery are yet to be seen, Lotus Capital's managing partner Stephane Pizzo told Opalesque today that striking a balance while maintaining divergence in investments will be very useful to asset managers in 2010.

"Managers that can make money in different environments and making more value of the volatilities all around will definitely make a head way in the near term," said Pizzo.

The asset manager believes the biggest risks facing the markets next year will be associated with the withdrawal of quantitative easing; the new environment of high policy rates; oil price volatility; and its consequential impact for financial sector regulation and how governments, significantly in Asia, will manage fiscal policies.

Eric Siegloff, head of strategy and tactical asset allocation at ING IM, said in an emailed report that "risky assets will be more favoured than risk-free assets" next year.

"The importance of yield in a low-return environment leads to a preference for large capitalization, quality, high dividend strategies in eq......................

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