Goldman Sachs Sign-Jan
A Goldman Sachs sign is seen above the floor of the New York Stock Exchange in this file photograph taken Jan. 24. Reuters/Lucas Jackson/Files

(Reuters) -- Goldman Sachs Group Inc. (NYSE:GS) downgraded its global equities allocation to neutral on a short-term basis Friday, even though the brokerage remains overweight stocks for the longer term.

The firm said in a research note it is worried that a rise in rates will drive stocks lower over the next three months, adding that “we also expect the general pace of returns to slow compared to what we have seen in the last couple of years.”

In its note, Goldman said the global acceleration in economic growth is “largely behind us and geopolitical risks are elevated.” Despite these factors, it still said equities are the most attractive asset class on a 12-month horizon “by a wide margin.”

Equity markets worldwide have rallied steadily through the year. The MSCI All-World Index hit a record in early July, having gained more than 5 percent in 2014. Goldman noted the gap between dividend yields and government bond yields remains high, and that measure suggests more outperformance by the equity market.

Dividing the world by region, Goldman is overweight in Europe and Japan and underweight in the U.S. When looking at specific sectors, the firm is high on growth industries -- it has overweight ratings for technology stocks in the U.S., Europe, Japan and elsewhere in Asia.

(Reporting by David Gaffen; Editing by Ross Colvin and Diane Craft.)