The decision of the US central bank to reverse its planned interest rate rises this year has bolstered the stock market, but a range of fund managers are urging investors to be cautious nevertheless.
The MSCI World Index is 10 per cent higher today than at the start of the year.
Iain Cunningham, who runs the Multi Asset Protector fund at Investec, said markets have risen as the US Federal Reserve has indicated it will not put interest rates up this year, whereas previously the market had expected as many as four rate rises.
Higher US interest rates are generally bad for all equity markets, because bond yields rise when interest rates rise making these lower risk assets more attractive instead.
Additionally, higher interest rates in the US lead to higher borrowing costs for companies and consumers, reducing the level of cash left over for spending, and so reducing the level of demand in the economy.
But the pause in rate rises has not prompted Mr Cunningham to add more risky assets to his portfolio.
He said: "I have been reducing the level of cash in the portfolio because a lot of the things people are worried about have reversed.
"Interest rates may not go up and while the Chinese economy has slowed, policy makers have realised this and acted. But while we are investing more in areas such as emerging market bonds, we are conscious that even with the very low interest rates and quantitative easing of recent years, growth hasn’t been very strong, and the market seemed to panic when US government bonds yielded more than 3 per cent.
"That is not normal, and implies that the trend rate of growth in the world is low, and investors should bear that in mind."
David Jane, who jointly runs £900m across a range of four multi-asset funds at Miton, said while the market had been boosted by the actions of central banks, and investors believing that the boost to equities from low rates will continue, economic data around the world has deteriorated and this will have consequences.
He said: "If economic and corporate data continues to deteriorate then no amount of free money can save an over-indebted business with declining earnings, and we will need to see the prices of many assets (both bonds and equities) materially lower.
"If on the other hand activity reaccelerates, the zombies will be saved to fight another day. Our approach is, therefore, to avoid those companies most exposed to excessive debt or very high valuations and, especially, to further reduce the risk in our bond elements of our portfolios."
Jacob de Tusch-Lec runs the £3.8bn Artemis Global Income fund which was among the very worst performers in the IA Global sector in 2018.
The fund has performed better in 2019, but Mr de Tusch-Lec is still not "bullish" on the outlook for markets.
The manager said: "While the gains in the global market are welcome, we are hesitant to interpret them as a resounding statement of confidence about what happens next. Instead, they seem to confirm that the sell-off in the fourth quarter of last year was an undershoot.