The best investment opportunities for 2020 will be in emerging markets for both equities and bonds, according to UBS Global Wealth Management's Chief Investment Officer Mark Haefele.

At the same time, Haefele said the bull market in the United States is not over despite the unexpectedly high returns in 2019, which in other circumstances might indicate an impending downturn.

“Fundamentals have already started to stabilize in Asia. They are now acting as a slight tailwind for the region's stocks, which we favor, Chinese stocks included,” the wealth manager said in a press release. “In fixed income, yields on the safest bonds are low, while risks are rising among some high yield issuers. Our favorite part of the bond market at present is U.S. dollar-denominated emerging markets’ sovereign debt, which offers a yield of 5%.”

Equity returns in the U.S. and globally will not reach the highs of last year, but “we do not currently see signs of a looming bear market for global stocks. We expect returns from public equity markets to be lower in the next 10 years than they were in the past decade,” Haefele added.

While the upcoming year looks relatively good, investors should concentrate on longer-term structural trends like the shift toward sustainability and on the opportunities presented by digital transformation, water scarcity and genetic therapies. Those with a greater tolerance for illiquidity can also take advantage of the additional risk premiums offered in private markets, UBS said.

UBS tracks 18 asset classes to develop its year-end report and all classes reported positive returns last year, compared to 2018 when only two asset classes had positive returns. For 2019, the scale of returns also was impressive, with the 20% gain on global balanced portfolios, with 60% global equities to 40% global bonds, which was the best outcome since 2009, UBS said. The U.S. stocks led the way with total returns of 31%.

The high rates of return stemmed from a return to monetary easing by the Federal Reserve Board and other central banks, along with improved relations between the United States and China, which boosted equity and bond markets alike, UBS said. The U.S. government 20+ year bond total return index generated a 16% return.

The end of 2019 also capped off a strong decade, as annualized returns for the S&P 500 during the decade were the best since the 1990s.

“After such a run, some investors may worry that it is time to take profit and retreat from the market. We do not believe history supports this concern and still see opportunities in the coming year,” Haefele said.