Page 1 of 2

Christine St Anne is Morningstar's online editor.

The new year has brought with it the headaches of 2011. The sovereign crisis still grips Europe. Growth uncertainty continues to surround the United States, while doubts remain on whether there will be a hard landing for China.

In fact, this year will bring with it the second round of the global financial crisis (GFC), according to Fidelity Worldwide Investment director Trevor Greetham.

Greetham says the GFC of 2008 was caused by banks and other highly leveraged financial institutions that were also linked to the sub-prime housing crisis in the United States.

"This second round is based on uncertainty surrounding the value of the eurozone sovereign debt. In 2008, the threat of bank runs was stopped by government intervention. We are now seeing a crisis of confidence in European sovereigns that will require equally forceful action," Greetham says.

Despite the onset of a "GFC 2," Greetham says a bullish case can be made for 2012.

"It rests on a US-led economic upswing strong enough to offset anticipated weakness in the European economy, and it assumes the worst-case scenario of a messy euro break-up can be avoided," he says.

"US data has been resilient, but as things stand I am doubtful a financial contagion from Europe can be avoided."

Good investment prospects often arise during these times, according to Ibbotson Associates managing director Daniel Needham.

"What is happening in Europe, the United States and China are big scary themes. However, the markets during these periods offer the best opportunities," Needham says.

He says the monetary policy responses will be supportive of capital markets, with potential for further quantitative easing in the US and Europe.

Needham notes that despite the mixed macroeconomic themes, global companies are in good shape. Many companies have good balance sheets, low gearing levels and strong cashflow.

For Needham, a diversified portfolio is critical as "no one knows what the market is going to do".

"It is important that investors continue to build a portfolio of assets that provide them with good returns without the capital risk," Needham says.

He says investors should avoid assets that everyone is chasing at the moment. Instead, Needham is looking at assets that investors seem to be avoiding.

Companies in Europe and the US are on his investment radar, as are Japanese companies which he says are "very attractive" at the moment.

In particular, Needham likes the consumer staples and utility sectors in Europe and healthcare stocks in the US.