How can you tweak your portfolio for the year ahead?
Next year is likely to be a very spicy one for UK investors, with elections due and the problems posed by a stagnant economy, war in Afghanistan and climate change uppermost in the minds of many. In particular, although markets have risen since March, investors in the US and UK are nervous about what is going to happen when their governments try to wean their respective economies off quantitative easing.
Below are five investment themes that I believe will be of key importance for investors in 2010.
Beware the bear
The threat of a double dip recession will resurface when the the Bank of England's calls time on its £200 billion stimulus package. For this reason, I'd definitely have some quality defensive stocks in your portfolio.
I'm keen on supermarkets and pharmaceuticals. My picks in these sectors would be Tesco (LSE: TSCO) and GlaxoSmithKline (LSE: GSK).
Green profits
Investors should be looking at companies actively attempting to solve problems associated with climate change. There are a host of opportunities available in everything from renewable energy, fuel cells, energy efficiency and water shortages.
However, to minimise your risk the best way to gain exposure to this is either to do it via a fund, ETF or to invest in a profitable company that has exposure to this area. Centrica (LSE: CNA) is a relatively low risk way to do this for example, as it holds 10% of fuel cell company Ceres Power Holdings (LSE: CWR).
Nuclear power
The importance of this form of energy if the world is to meet targets to cut carbon dioxide generation is increasingly being recognized.
Carillion (LSE: CLLN) provides construction, decommissioning and support services to the UK nuclear industry. Centrica, through its ownership of 20% of British Energy has exposure to the nuclear industry as does Amec (LSE: AMEC), the UK engineering, energy and power consultant.
Emerging markets
With growth rates in the US and Europe having turned negative, people are looking to invest in emerging markets -- low to middle income countries -- where higher economic growth promises higher returns.
The range of countries covered by this term is huge, everywhere from Angola to Zambia. However, the countries most commonly cited as providing great opportunities are the so-called BRIC economies, of Brazil, Russia, India and China. Goldman Sachs has predicted that by 2050 these economies will be four of the five largest economies in the world, along with the US. Indeed, China is expected to have overtaken the US to become the most powerful economy on earth.
Again, managed funds or ETFs are the safest way to investment in these markets. Alternatively, if you want direct exposure, India's second-largest software services exporter Infosys Technologies is worthy of consideration, as is the Chinese electric carmaker BYD (Warren Buffett bought a 10% stake in this company in September 2008).
Global consumers
Even in times of uncertainty people remain loyal to brands they understand and trust. Global consumer brands that have constantly delivered for their purchasers won't be thrust aside, even in mature markets like the US and UK. Similarly, consumers in developing countries are eager to get a slice of the upwardly mobile Western lifestyle.
Companies such as drinks company, Diageo (LSE: DGE), Coca-Cola, Nestlé and McDonald's deliver good dividend yields and allow consumers to feel good about themselves -- at least while they're consuming their products. Moreover, even if market growth in mature markets is hit by recession the emerging markets can pick up the slack.
More from Chris Menon:
> Looking for more share ideas? In Shares 2010, Motley Fool writers pick their favourite shares for the year ahead.
Chris Menon owns shares in Tesco.
