We expect interest rates to «normalise» over the next few months, with rates rising over the entire maturities spectrum. Against this backdrop and given the high level of government debt, we recommend that government bonds be underweighted. With economic recovery lacklustre and the sharp contraction in credit spreads, a selective approach should be adopted with regard to corporate bonds. Given the attractive dividend yield, the lack of investment alternatives, the generous supply of liquidity and the fact that institutional investors are still carrying low equity allocations, we recommend an overweight for equities. This said, the high level of volatility means that a passive buy-and-hold strategy is unlikely to produce much in the way of returns in 2010 either.