As interest rates around the world hover near zero investors should move away from holding cash and into other investments, advises Jeremy Beckwith, chief investment officer at UK private bank Kleinwort Benson.

Kleinwort Benson expects that interest rates are going to stay low for a very long time and that as a consequence traditional “risk free” investments such as cash and government bonds are actually becoming a risk to clients’ portfolios. Such holdings are increasingly return-free investments and so clients have no choice but to take greater investment risk, argues Mr Beckwith, who advises that investors start “gently” adding risk, in line with their own investment horizon and risk appetite.

Investors should not however rush back into the equity markets over the summer, cautions Mr Beckwith, but in the months ahead he believes it makes sense to be thinking of being fully invested.

“On a long-term view this is probably a sensible strategy since risky assets are currently cheap compared to most long-term, valuation criteria.  The economic risks point to a long and slow recovery, but the low valuations and underweight equity positions of investors mean that markets could have more rapid upside potential over the next 12 months,” he said.

In terms of regions, Kleinwort Benson expects that the best performing economies are likely to be in the emerging markets and in Asia. However, while such countries have been strong performers already this year Mr Beckwith warns that investors must go into these markets with a five-year view. Emerging markets remain volatile, he said, and are not for those investing over the shorter term.

Kleinwort Benson is looking to play China through Hong Kong companies in particular, explains Mr Beckwith, as the city state combines US levels of interest rates with Chinese levels of growth and through copper, coal and iron ore producers. Elsewhere, the bank remains negative on Europe and cautious on Japan.

In terms of asset classes Mr Beckwith expects bonds to deliver during the third quarter of this year, despite them not having fared so well last month. Equities, meanwhile, should enjoy a strong rally over the final quarter, he believes.