Speaking at a Fidelity FundsNetwork investment forum in London last week, Lyttleton said: “If you look at the performances of the IMA sector, you can see dramatically different returns from different products.
“Some of these products are very flimsy and others are very good, so be careful about which products you invest in, as some will give the whole sector a bad name if we are not careful.”
Lyttleton urged advisers to grill fund managers to understand how much they have thought the product through.
He said: “Try and understand the individual product you are getting into, what it can do, what conditions it will do well and badly in and what your downside risks are.”
He told delegates the UK economy is not in “a very pretty place” and that the outlook for consumer remains uncertain.
Lyttleton said: “We have only just started our recession and we are going to be it in for a while. Public finances are in a complete mess and the Government is going out there spending as much as it can which will only keep us in that mess for longer.”
Despite this backdrop, Lyttleton is looking to participate in the market through companies with more robust balance sheets.
He said: “Companies that have strong business prospects, strong management teams and long-term franchises that just got themselves into problems with too much debt, sure, we will support those. Will we support those that are strategically challenged with management teams that do not know what they are doing? Probably not.”