Aberdeen Asset Management believes investors should pay attention to valuations, because greater volatility suggests that markets are not very certain of what is being priced in.
Aberdeen also said the global financial markets could experience renewed turbulence because of weaker-than-expected economic growth.
Growth has been affected by constant global imbalances and high public debt. Along with the European credit crisis, the outcome is a “vexed economic climate", it said.
Considering the increased volatility, the company said investors should implement a global approach to increase returns and reduce risk, including the diversification from overweight portfolios in developed markets’ bonds and currencies.
The company also favours emerging markets, particularly Asian markets, over the next three to five years.
"The fact that the Chinese government is going to allow the renminbi to appreciate against the US dollar will encourage other central banks in the region to let their currencies appreciate as well,” said Donald Amstad, director at Aberdeen Asset Management Asia.
"So I would say our base case is for, broadly against the US dollar, three to five percent currency appreciation for Asian currencies per annum for the next couple of years."
Meanwhile, the company expects single digit equity returns this year, considering the strength of market returns last year.
The company said investors might dip into oil-related stocks, which has dropped in the short term because of the oil spill in the Gulf of Mexico.
"That just means that in the long term, the price will go up further. So you want to buy oil companies when the oil price has fallen, not when the oil price is rising. You are buying the short term bad news, for the long term good news," said Stephen Docherty, head of Global Equities at Aberdeen Asset Management.
Aberdeen also said that investors should purchase equities based on fundamentals instead of following benchmark indices.
For example, the MSCI World index of 1500 companies is not an accurate reflection of emerging markets that has grown tremendously, it said.