Investors should be piling into global blue-chip equities as the best “each-way bet” this year given the prevailing mood of uncertainty, argues Burkhard Varnholt, Sarasin’s chief investment officer.

Investors undeniably face significant headwinds at the moment as global economic policy divergence and adverse economic shocks cause increasing market uncertainty. In the West central bankers are fearful of double-dip recessions, while in the East inflation is a major concern, notes Varnholt, also pointing to the recent global oil price shock, Japanese earthquake, and Greece’s possible default as strong indicators of weak global markets.

The global unpredictability of the markets, coupled with the weak indicators, will certainly carry risks for global fixed-interest portfolios, and for highly rated equity and real estate assets in the emerging world, says Varnholt. In this context, global blue-chips will likely prove a good bet.

“In spite of contrasting economic scenarios between East and West, the global equity earnings machine simply continues to march on, with another estimate-beating quarter of earnings matched by some stunning dividend rises and cash flow forecasts. Our policy therefore remains the same, with global blue-chip equities continuing to be the best each-way bet in the face of policy uncertainty,” Varnholt.

In Sarasin’s view, the recent correction in most major equity markets has created an attractive opportunity to add exposure amid remarkably low levels of market volatility across all global indices and near-record corporate cash flows: as margins across the board are improving, and set to improve further into 2012, companies continue to take costs out of their structure.  Additionally, the fact that relative price-to-cash flow valuations are well below the long-term average, makes global blue-chip names particularly attractive, says Sarasin.

Turning back to Europe’s debt problems, although Varnholt expects that Greek, Irish, and Portuguese sovereign debt restructuring will create significant volatility in the markets, he regards a Greek default as likely to be a relatively modest earnings event for European blue-chip names, with little long-term impact on Tier 1 ratios.