Equities and commodities are likely to perform better in 2012 than they did in 2011, according to Jack Malvey, chief global market strategist for BNY Mellon Asset Management. 

In a conference call with clients and consultants, Malvey said he expected those two asset classes to pick up in the second half of the year as uncertainty surrounding Europe and the U.S. budget and election clears.

“In less than a year, I expect the medium-term economic fate of Europe will be defined and the U.S. election outcome will be known,” he said, according to a company announcement. 

Malvey sees equities rising 10% to 15% in 2012 propelled by “the probability of stronger economic growth” and factors such as mergers and acquisitions, equity buybacks, dividend increases, and asset allocation shifts from bonds to equities, said BNY Mellon in a statement.

Commodities, meanwhile, could gain 10% as expectations of economic growth rise and investors “continue to turn to commodities as a hedge against possible currency weakness, inflation or deflation, and general uncertainty in the traditional financial markets,” said Malvey. The commodities likely to outperform, he added, are those closely tied to economic cycles, such as industrial metals like copper.  He excluded gold from his prediction, saying that “it has already enjoyed major appreciation over the past several years.”

Malvey was less bullish on bonds, noting low interest rates made dividend yields more attractive. “The fixed income asset class is not likely to be as generous to investors as in most years since 2000,” he said. 

Margarida Correia writes for Bank Investment Consultant.