FTAdviser.com

Advertising

Edward Bonham Carter said equity yields would look attractive compared with falling yields on government bonds once sentiment about liquidity improved.

He said investors were likely to move back to traditional income strategies after the failure of more contorted alternatives.

He also predicted profit warnings would rise, some dividends would be cut and the yield on the market would fall.

But he added there were still many successful large firms that could continue to grow their dividends and buy back shares.

In the short term, Mr Bonham Carter told investors to expect continued short-term volatility despite the bank bail-out announced earlier last week. He said fears of an economic slowdown had led to concern over earnings prospects.

He said credit instruments such as corporate debt and leveraged loans were still less liquid than equities, which had prompted cash-hungry investors to sell some of their stocks.

But he added a number of Jupiter's managers were buying back into the market to take advantage of low valuations, many of which he said had already priced in gloomy economic forecasts.