>Global Opportunity Asset Locator (GOLDMAN SACHS)

GS GOAL: We are introducing a new quarterly product GS GOAL. This draws on research from across ECS (Economics, commodities and strategy research) to locate investment opportunities across asset classes. We focus on key themes, recommendations and how to implement them.

Most assets offer opportunities: We expect above consensus global economic growth in 2010-11. Due to large output gaps in DM economies, and our view that global trend growth is c.4%, we believe this will occur alongside very low inflation and interest rates, at least in DM. This combination should support most assets in absolute terms. On a relative basis, we have a pro-risk stance, recommending overweight commodities and equities, neutral on credit and underweight government bonds and cash.

Commodities and equities offer best risk/return: Equities returns should be underpinned by strong profit growth in all regions, falling volatility and attractive valuations. For the next 12 months, we see the highest local currency returns in parts of Asia (China, Taiwan and Korea particularly), followed by Europe, the US and finally Japan. In commodities, our high aggregate return expectations mask a differentiated view within the group; the strongest prospects are in oil, followed by copper and gold. Agriculture offers little upside in our view. In corporate bonds, we would avoid adding risk in lowquality credit, preferring BB-rated bonds, and favoring the US to Europe. Government bonds remain supported by ongoing accommodative monetary policies and falling inflation. We expect 10-year rates to decline in the US and remain stable elsewhere.

To read the full report: ASSET LOCATOR