As fears about global growth continue, strategists at Sarasin Group are urging investors to be cautious for the short run as uncertainties are resolved, and continue to draw income from dividend-paying “Nifty Fifty” global stocks.

Investors have become concerned about what happens when governments and central banks start to cut back on the fiscal stimulus package measures, the Swiss banking group’s economists and strategists say.

“To date, where governments have 'tested the waters' and cut stimulus, the results have been decidedly mixed. It is this uncertainty among businessmen, economists and politicians alike that is driving investors into the arms of the government bond markets, and condemning even the very best of the ‘Nifty Fifty’ blue-chip equities into a frustrating market trading range, seemingly regardless of the quality of earnings or dividends they produce,” Guy Monson, chairman of the Investment Policy Committee at Sarasin Group, said in a briefing note.

“Our hunch is that this [uncertainty] won’t last for very long but investors will need to be patient – either economic growth stabilises at some point, bond yields normalise and stocks rally, or else central banks release more liquidity, yields fall further and ultimately investors buy blue-chip stocks for their balance sheet strength and yield,” he said.

The irony of this uncertainty, Sarasin says in its note, is that corporate earnings remain “extraordinarily robust”, rising by 37 per cent in the latest quarter in the US, with a near record 75 per cent of companies beating estimates. It says there are similar trends in other markets.

In recent months, Sarasin, along with a number of other firms, has urged wealth managers to pursue income-generating strategies, such as holding firms in defensive, relatively safe sectors where there are regular dividend payments. Sarasin’s Monson has argued that such an approach makes sense while interest rates and yields on holding cash are so low.