Fidelity Worldwide Investment multi manager and director of asset allocation Trevor Greetham says UK investors have not been this optimistic since the dot.com bubble.
Greetham is predicting a market which could see equities return 20 per cent on average.
He says: “The dot.com bubble was the last time we saw this level of optimism in the UK. In this backdrop I see 20 per cent as an average return for stocks. When the stars are aligned and you do have good growth and slack in the economy you can get these sorts of returns. We are currently positioned to a maximum of equities.”
Greetham sees the best equities opportunities coming from the mid cap space and is concerned a strengthening pound could act as a drag on the large cap indices. He is underweight on bonds but does not see a case to be rid of them entirely.
Greetham says: “I am cautious about government bonds and you could see losses here. They are not the safe haven they used to be but are useful for diversification so I would not suggest selling them.”
Three Counties IFA Andrew Alexander also believes this will be a good year for equities.
He says: “The easy money is gone but we completely agree. It is good to see Fidelity coming out and saying this. It is quite trendy to say returns have been done and to run for the hills.
“There will be another leg up in equities this year and there is potential for mergers and acquisitions activity to give us this.”