Stephen Jones, whose background was in running bond funds, said investors should avoid plunging into cash as the prime minister signs the Article 50 letter giving notice the UK intends to withdraw from the European Union (EU).
The bold call comes after prime minister Theresa May signed the Article 50 letter last night to be delivered by hand by Brussels Ambassador Sir Tim Barrow to the European Council headquarters today.
Jones said disruptive events or financial crises were unlikely to happen as a result of the development, which starts the clock ticking on a two-year process of negotiation before the UK exits the EU in 2019.
“Cash is a wasting asset against a backdrop that is both higher growth and higher inflation,” he said.
“Yes, the cycle might be getting a bit long in the tooth now, but it has further to run and investors need to think about allocating to risk assets that can generate a better return.”
Bullish Jones currently favours equities, high-yield bonds and relative value plays, according to Kames Capital.
He said markets and economies continue to benefit from support from most global central banks and governments.
“We are only now beginning to see interest rate rises from one central bank; the others are happy to keep the accelerator pressed as near to the floor as they dare, certainly for the next couple of quarters,” he said.
