“Our base case is that we will see several surges in Covid cases until a medical solution is found,” he said. “Looking over the next 12 to 18 months, we are cautiously positive on equities versus bonds from a risk-adjusted return perspective.”

Tollette says his team is leaning toward “defensive sectors and regions” as it predicts a slow and uneven economic recovery until a vaccine or effective treatment is found. It’s likely to be Nike Inc. “swoosh” shaped rather than V or U shaped, he said. Like Watson, he notes that Asian countries are further along in addressing the impact of the pandemic.

“We do not expect global GDP to fully recover until late 2021 or 2022,” he said. “This would make the Covid crisis longer-lasting–from a GDP standpoint—than the global financial crisis but significantly shorter and less severe than a depression.”

BlackRock is also sticking with its neutral weighting on equities, favoring buying quality stocks across regions. It points to the trillions of dollars pumped in by central banks and governments to contain the crisis.

“We see the unprecedented policy response to cushion the pandemic’s blow as key to support global equity markets—against a backdrop of historic uncertainty for activity and earnings,” analysts led by BlackRock Investment Institute Global Chief Investment Strategist Mike Pyle wrote in a note. “We still prefer an up-in-quality stance and like economies with ample policy room.”

Capital Group’s Watson says he remains hopeful about the outlook for his stock picks, partly because he lived through the SARS epidemic of 2003.

“I have little cash today and I like all the companies I hold,” he said. “I find myself more optimistic than some.”

This article was provided by Bloomberg News.

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