10 Global Investing Strategies for 2013

Looking for international investing ideas? Every year, Morgan Stanley Smith Barney unveils its list of global investment ideas. Its 2012 list generally posted strong gains led by emerging markets equities (up 19.1%), dividend aristocrats (up 16.9%), U.S. large-cap growth (up 15.3%), and global gorillas (up 13.4%).

Check out some of its ideas for this year or check out the full report from Morgan Stanley Smith Barney here. (The order is not indicative of preference.)

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1. Commodities and Gold 1. Commodities and Gold

Benchmarks: 50%/50% split between the Dow Jones-UBS Commodity Total Return Index and the spot price of gold

Morgan Stanley said: Broadly speaking, the performance of commodities has significantly trailed that of other risk assets during the past year. … With regard to gold, the accommodative policy stance of the world’s major central banks seems likely to continue to fuel concerns about future inflation and currency debasement. This, in turn, should spur investment demand for gold.

2. Emerging Markets Bonds 2. Emerging Markets Bonds

Benchmarks: JP Morgan Emerging Market Bond Index, local currency, unhedged

Morgan Stanley said: Emerging Markets bonds are one of the more attractive bond sectors. This asset class has undergone a rerating during the past several years because of improvement in the underlying credit quality of the sovereign issuers.

3. U.S. Large-Cap Growth 3. U.S. Large-Cap Growth

Benchmark: Russell 1000 Growth Index

Morgan Stanley said: As with the global gorillas, large-cap stocks are better-positioned to benefit from established sales channels in emerging markets. Moreover, from a valuation perspective, large-cap stocks appear historically cheap relative to mid-and small-cap stocks.

4. Dividend Aristocrats 4. Dividend Aristocrats

Benchmarks: S&P 500 Dividend Aristocrats Index

Morgan Stanley said: With money market interest rates and traditional safe haven bond yields likely to remain near record lows, dividend-paying equities should continue to provide an attractive alternative for income-seeking investors.

5. Global Gorillas 5. Global Gorillas

Benchmarks: S&P Global 100 Index

Morgan Stanley said: We believe that investing in large, DM companies with outsized exposure to the emerging markets—we call them “global gorillas”— is another way to capture the growth from economies that expect to account for about 80% of global growth this year.

6. Emerging Markets Equities 6. Emerging Markets Equities

Benchmarks: MSCI Emerging Markets Index

Morgan Stanley said: Emerging market economies are on much better footing than their developed-market counterparts, due to growing middle-class consumer sectors that support domestic demand.

7. Investment Grade Credit 7. Investment Grade Credit

Benchmarks: Barclays Capital US Aggregate Corporate Index

Morgan Stanley said: Investment grade corporate bonds continue to offer an attractive combination of yields that are higher than those on traditional safe havens, such as U.S. Treasuries, and high credit quality.

8. High-Quality Municipal Bonds 8. High-Quality Municipal Bonds

Benchmarks: Barclays Capital AMT-Free Intermediate Continuous Municipal Index

Morgan Stanley said: In light of the outlook for subpar economic growth, which will continue to strain state and local government finances, we favor “high quality” (rated A or better) general-obligation and essential-service revenue bonds rated BBB or better with maturities of five to 11 years.

9. Water 9. Water

Benchmark:: ISE Water Index

Morgan Stanley said: We continue to favor the investment prospects for water—a finite resource that is not always available where it is needed.

10. Master Limited Partnerships 10. Master Limited Partnerships

Benchmark: Alerian MLP Index

Morgan Stanley said: MLPs are concentrated in natural-resource industries such as oil, natural gas and minerals extraction. They are attractive to income-seeking investors