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NEW YORK (TheStreet) -- Monetary policy divergence among central banks is breeding greater uncertainty in the global economy, but that is no reason to give up on European or U.S. stocks, says Frederic Babu, co-chief investment officer of Natixis Asset Management U.S.

"One of our key themes this year is that there is light at the end of the tunnel, and we are still constructive on the world's riskier assets," he says, adding that he is positive on U.S. stocks but more bullish on European and Japanese equities.

Babu thinks that investors should remain nimble and diversified because while the road ahead may be higher, it will likely be rockier as well, due to monetary policy distortion, potential liquidity air pockets and fringe politics.

Investor complacency around bond and equity valuations will also leave room for surprises, in his opinion.

Still, Babu sees the strengthening dollar in a positive light, despite the fact that it weighed on U.S. stocks in the first quarter.

"We expect the dollar's strength to continue, albeit as a slower pace going forward," he says. "It has hurt some companies on the top line, but earnings continue to grow, and the U.S. economy has been able to weather it."

Meanwhile, Babu says the European and Japanese economies have greatly benefited from their respective currency's competitive weaknesses, and that has given corporations in these regions strong cover to make reforms.

In Europe, he is a big fan of equities right now, as central banks go through unconventional measures to spur the economy.

Babu is less positive on emerging-markets stocks because of the threat of higher interest rates in the United States. A spike in rates has historically hampered emerging-markets returns.

"A strong dollar and low commodity prices hurt emerging markets, and there is a fear certainly that higher rates in the U.S. can continue this trend," Babu says.

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