Investment management firm Chiswell is advising charities to resist the trend towards "illiquid and riskier assets" such as bonds and stick with shares.
Low interest rates and a fear of deflation have led US institutional investors such as pension funds to switch to bonds to guarantee a stream of income.
But Chiswell consultant Philip Williams argues that UK investors are operating under different conditions to their US counterparts.
"The UK does not face the same immediate dilemma as the US as its growth outlook is more steady. However, economic growth in Europe is declining and the Euro has got stronger, so deflation has become more of a risk," he said.
Williams argues that UK and European markets are looking more attractive with "generous dividend yields". "Equities continue to offer the best investment prospects," he concluded.
David Bailey, vice-president of charities with Deutsche Asset Management, said: "The $64,000 question is 'will equities regain the high ground over the next three years and claw back some of the significant losses over the period 2000 to 2002?'"
"Charities' investment portfolios should remain diversified with overweight in equities compared with bonds, and have only relatively small exposure to illiquid asset classes such as property, private equity and some hedge funds," he added.
But Clive Paine, charity development manager with Close Wealth Management, said that charities should be reassessing their asset allocation. "When faced with under-performing portfolios, charities should not stick their head in the sand to avoid difficult decisions," he said.
Charity investments rose in value by an estimated 11 per cent in the second quarter of this year.