Jupiter's Peter Lawery has said the next five years promise to be uncomfortable for investors as they try to dodge 'punches' in the form of central bank policy moves.
The co-manager of the £4.7bn Jupiter Merlin Income portfolio likened the uncertainty of tapering in the US to a famous Mike Tyson quote: "Everyone has a plan until they get punched in the face."
"The most recent punches are coming from central bankers, especially the Federal Reserve," Lawery said.
"The ‘will they, won't they?' debate is dominating everything at the moment, which is a somewhat ridiculous situation to be in.
"Risk asset markets are taking fright because [the Fed] might reduce stimulus, but QE is supposed to be an unconventional policy - is taking it away not a sign the recovery is actually happening?"
The impact of tapering on the markets had created a growing reliance on "tourist money", which flowed rapidly in and out of asset classes as the Fed's position changed, he said. He also questioned the continuing speculation that tapering will continue long into 2014.
"If QE were to become a permanent fixture, we would have a real problem," he said. "If printing money was the solution, Zimbabwe would probably be the richest country on the planet. The Fed cannot keep printing."
The Merlin Income fund has underperformed the sector average over the last year, returning 10.6% to 1 November compared to 10.9% for the IMA Mixed Investment 20-60% Shares sector average.
However, Lawery said he will continue to ignore short-term cyclicality in favour of long-term plays.
"The next five years will probably be intellectually and emotionally uncomfortable, but patience will be rewarded," he added.
Partner Insight: For Blackfinch, the arrival of its IHT portfolio services was a 'natural evolution' in the group's offering and points to an established track record of returning cash to investors.
Senior Managers Regime
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