ALTHOUGH bank rights issues “book-ended” stock market progress over the past year, there is a major contrast between the emergency transfusions a year ago – underwritten by governments – and the current round which is happening against a backdrop of greater financial stability, led in many cases by the private sector.

With 2009 proving less of an economic disaster than feared, thoughts are inevitably turning towards the prospects for the years ahead, in the hope that strategic themes will carry more weight than the athletic repositioning that proved necessary in the past two years.

Since the credit crisis began, keeping to a predetermined investment approach has been trickier than usual.

It was hard to be sure which fallen values were bargains and which simply revealed previously overlooked bad news. Similarly, do we now focus on the bounce (risk assets being above their lows) or the level (still below mid-2008)?

The need to navigate the reefs and shoals is always with us. However, it is also vital to keep a sense of direction, to avoid drifting into a mangrove swamp. We see three enduring themes that are likely to underlie medium-term investment allocation.

The first is a preference for real assets, such as equities and real estate. After the derating and price falls of recent years they are priced to give higher returns than cash or government bonds, albeit with accompanying price volatility.

By contrast, bond returns have long been boosted by the fall in yields (akin to a rising PE for equities) but from below 4% there is more scope for yields to rise (producing capital losses) than to fall further. Cash rates seem likely to remain low for years, as developed economies work off their debts.

The attraction of real assets is more than relative pricing, however.

The global experiment in monetary policy and the temptation of indebted governments to condone a rise in inflation suggest a strategic risk of higher inflation. Real assets offer some protection against this, whereas bonds and cash do not, as the generation which invested in gilts after World War II will attest to.

Our second enthusiasm is for emerging economies, where growth trends are producing a shift in the economic centre of gravity away from the West and Japan. We have the debts, they have the money – in contrast to past cycles when the IMF often bailed out the emerging world.

Some caution is warranted, as emerging economies can submerge again but the growth opportunities seem likely to remain better in these markets and sectors linked into their industrialisation, such as natural resources.

Our third theme of economic recovery is perhaps more debatable, at least the pace of it. After the massive global policy stimulus, animal spirits have revived, although there are head winds.

The debt burden has not gone away and will have to be addressed, so growth in the developed world could be relatively anaemic.

This means putting an emphasis on companies whose management or inherent business franchise enable them to prosper in what could remain indifferent economic conditions.

These themes are not a “fire and forget” basis for investing and will not guarantee a smooth ride, but they look to have a reasonable shelf-life, assuming the world continues to move from crisis to convalescence.