As the current market moves away from 'risk on-risk off' conditions, equities continue to be a stock pickers' game, according to Standard Life Investments.
In its second quarter global outlook, Standard Life said that opportunities for high returns are stemming from individual companies, as businesses grapple with a changing global macro-economic environment.
"Global equity markets have posted further gains against a backdrop of gradually improving economic data and investor sentiment," Standard Life's investment director for global equities, Dominic Byrne, said.
"We continue to invest on a stock-specific basis, favouring opportunities where we feel we have insights yet to be recognised by the wider market."
Positive investor sentiment is continuing in the early months of the year and Standard Life has said a new return environment is starting to emerge.
"The 6.5 per cent outperformance of risky over safe-haven (global equity versus global bond) assets over the last 12 months suggests that a new return environment is starting to emerge," Standard Life's chief executive, Keith Skeoch, said.
"There is nascent evidence that not only is new money flowing into risky assets but investors are starting to reward faster growing companies, those who are both delivering good income and starting to recognise the importance of future growth in the form of capital spending."
Despite this market positivity, Standard Life has said that macro-economic factors continue to impact investment returns.
The group added that the global financial crisis has created a loss of trust in the financial services industry which has led to an increase in regulation across the globe - and may adversely impact investors.
"The level of legislative and regulatory change affecting financial services companies is substantial," Standard Life Investments governance and stewardship director Mike Everett said.
"History shows that post-crisis regulation often tends to go too far, as well as being backwards looking. Unintended consequences appear later."
