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There is no need to change a strategically defensive stance to equity markets, said Gary Potter, fund manager at Thames River.

“Equity market valuations do not appear to be expensive at face value," he said. "It is just that there is little clarity in what earnings will be over the next two years, and investor risk aversion remains high."

The economic and corporate news is likely to be “ugly” and persist through the first half of 2009, said Mr Potter, as the financial crisis moves to a crisis in the wider economy.

Government intervention to stimulate the economy through fiscal and monetary policy is a welcome move, but further cuts to interest rates are needed, he added.

Further, macroeconomic factors are continuing to influence multi-manager portfolio construction, and Thames River is retaining cash at higher than normal levels, Mr Potter said.

“We have successfully managed our cash levels tactically and managed to participate in the recent rally before correctly reverting to our strategically defensive stance," he explained.

"At some point, it will be necessary to take a more fully invested position, but it is not right to do so just yet."

Thames River has attempted to ride out the current economic problems by holding cash and market neutral funds such as Cazenove UK Absolute Target, alongside fund managers such as Odey in Europe.

Mr Potter said: “In other words, we have stuck to good-quality vanilla ice cream at a time when this has proved to be the right strategy."