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Jeff Munroe, chief investment officer at Newton, said: “It is a fundamental principle of long-term investing that if you want to achieve higher returns, you must be able to accept higher risk and volatility along the way.”

Mr Munroe said holding UK equities for over eight years during the last 108 years has produced higher real returns than gilts, with lower deviation, according to Thomson Datastream.

Even during periods of short-term volatility in equities, such as the stock market crash of 1929 or the bursting of the tech bubble in 2000, equity-market performance has tended to even out over time.

“Investors should be thinking about investing through market cycles and not trying to pick the best time to invest,” Mr Munroe said. “As hard as it is at certain times, it is advisable to avoid the herd mentality, which inevitably sees investors piling in at the top of the market and selling at the bottom.”

Over the long term, equity markets have proven to be a powerful way of generating income and capital growth, he said.

“While we are currently witnessing important changes in the contours of financial markets, it is important for investors to consider a long-term investment horizon.”