The chairman of the £3.24bn RIT Capital Partners investment trust has long been bearish on equities,selling around £200m worth of equities in the half-year to August 2016, and buying gold.
He is sceptical the policy of quantitative easing has delivered the level of sustainable economic growth to justify current equity market valuations.
The founder of J Rothschild Assurance Group - now St James's Place - continued this theme in the half year report of the trust, covering the period to June 30.
He said: "We do not believe this is an appropriate time to add to risk. Share prices have in many cases risen to unprecedented levels at a time when economic growth is by no means assured.
"The S&P is selling at 25 times trailing 12 months’ earnings, compared to a long-term average of 15, while the adjusted Shiller price earnings ratio, which averages profits over 10 years, is approximately 30 times.
"The period of monetary accommodation may well be coming to an end. Geopolitical problems remain widespread and are proving increasingly difficult to resolve.”
Lord Rothschild is concerned the policy of quantitative easing, epitomised by record low interest rates in much of the developed world, is coming to an end, and as a result equity market performance will be poor.
The areas of the equity market on which Lord Rothschild is focused are Asia, where he believes consumer spending will be a driver of returns, and technology companies linked to what he calls the "fourth industrial revolution".
Lord Rothschild increased the trust’s exposure to absolute return funds and private equity investments.
But RIT has only returned 1.72 per cent in the first half of the year, compared with 9.3 per cent for the average fund in the AIC Flexible Investment sector in the same time period.
Performance was hit by the relative strength of sterling in the first half of the year, Lord Rothschild has a negative view of sterling and has been buying dollars and Euros.
He said in order to capitalise on the potential for technological change to deliver returns in the years ahead, the trust has entered a partnership agreement with Solar Capital, a venture capital firm based in Sillicon Valley.
Lord Rothschild said RIT will invest in a range of Solar Capital funds in the coming years.
The Rothschild Investment Trust announced a 16p dividend for the half year, bringing the annual dividend to 32p, a 3.2 per cent increase on the previous year.
The trust trades at a premium to net assets of 6.8 per cent.
