Despite central bank tightening, a slowdown in Chinese economic growth, and tariff wars diminishing returns in 2018, developed market equities could provide institutional investors with mid- to high-single digit total returns in the coming year, according to a 2019 Outlook report from global investment firm Cambridge Associates.

“A key question for 2019 is whether this recent volatility marks an intermission of the nearly decade-long bull market or a turning point,” Wade O’Brien, managing director of Cambridge Associates, said in a release. “We think it’s the former, but the second act may be far shorter than the first.”

However, Cambridge hedged this relatively positive forecast with a warning that while it expects economic expansion to continue in 2019, volatility will likely remain elevated, and investors could see more risk and less return than in recent years.

Cambridge said that despite the US business cycle being in an advanced stage, it sees a low risk of a near-term recession.

“Global economic growth will remain supportive if it stabilizes near current levels, but a further slowdown would certainly present an additional headwind, with trade and political developments standing out as wildcards for the outlook,” said the report. “Share repurchase activity should also continue providing a modest boost to earnings growth on a per-share basis, particularly in the United States, where the recent record pace of buybacks should continue for another few quarters.”

The report also said that while some may expect the bond market to rebound after a down year in 2018, 2019 could prove to be a second difficult year.

“Treasury issuance is ballooning because of the US fiscal deficit, and yet central bank balance sheets are shrinking fast,” said Sean McLaughlin, Cambridge Associates’ head of capital markets research. “This previous tailwind is fast turning into a headwind. And non-US buyers are on strike because of the high costs they face hedging currency risk today.”

Dividends should also continue growing at a robust pace due to free cash flow generation and better capital discipline, said the report. Additionally, with EPS growth likely to slow from peak rates of the last two years, the firm expects dividends to become a larger contributor to total returns next year.

“Because these risks and uncertainties are offset by continued conditions for growth, we recommend investors remain roughly neutral on risk assets,” said the report, “while also developing a strategy for managing through a recession-related bear market.”

But the report was less optimistic about the prospect for markets outside the US in the coming year.

“In 2017, emerging markets equities could do no wrong. In 2018, they could do no right,” said the report. “In 2019, some of the same macroeconomic influences could weigh on sentiment toward emerging markets assets. While emerging markets don’t appear vulnerable to a 1998-style debt crisis, the macro backdrop is not all that appealing.”

However, the report also said that with a P/E multiple of just 13, and a nearly 3% dividend yield, emerging markets equities might not be overly sensitive to fluctuations in expected earnings.

“For investors that can stomach the considerable drama that this asset class metes out, we advise modestly overweighting both EM and developed ex US markets, underweighting the expensive US market,” said the report . “We believe that over the medium and long term, this posture will boost returns; however, if the overall environment for equities were to darken, the cheapness of emerging markets will not matter over shorter periods.”

Cambridge also said that UK equities are the “dark horse” asset class in 2019.

“If the UK can somehow shepherd the Brexit compromise with the EU through Parliament, UK assets could be off to the races,” said the report, “particularly more domestic-oriented mid-cap stocks, which would face fewer headwinds than large caps from the expected sterling rally associated with an orderly Brexit outcome.”