Investors have been advised to watch the oil price as a key indicator of fear levels in markets about geopolitical tension.
Apollo Multi Asset Management has said investors have been “far too complacent” in spite of the “severity” of recent events.
The group’s Ryan Hughes said central bank support had been a buffer to markets, which have continued to march higher with only brief spells of mild weakness amid tensions in Russia and Ukraine and the growing conflict linked to Islamic State militants.
“Geopolitical concerns are nothing new, and while these tensions remain localised we feel that markets will continue to focus on the more encouraging economic news,” he said. “There has not been any significant move in the oil price, and we feel that any disruption in this market could trigger a more severe market reaction.”
Mr Hughes said he and his team’s funds were “relatively cautiously positioned” and expected the best returns to come from “cheaper equity markets”, including Asia, emerging markets and Japan.
In July, he said his best performing holdings included the Hermes Asia excluding Japan fund, which “benefited from the rebound in Chinese stocks” and returned nearly 7 per cent.
