Julian Howard of the investment manager GAM warned that the fate of the stock market relied primarily on global central banks.
“Everything that is happening in the stock market at the moment is ultimately a response to inflation, which is at a 40-year high,” he said. “The central banks are mandated to combat inflation with higher interest rates. But this is an almost impossible balancing act.”
DIY investors face two scenarios, he said. The first is that interest rate rises spark a recession and corporate profits suffer. In this case, Neil Birrell of fund house Premier Miton Investors recommended turning to sectors that did not depend on the health of the economy.
“Investors should look at industries such as healthcare and telecoms, where revenues are not overly sensitive to the economy,” he said. “London has market leaders in this area such as GlaxoSmithKline and AstraZeneca. We own Spirent Communications, a telecommunications equipment provider.”
Dan Boardman-Weston of the wealth manager BRI recommended that investors allocate more of their portfolio to “real” assets in the event of an economic downturn.
He tipped Warehouse Reit, a real estate investment trust, which has returned 20pc in the past year. “This trust rents out warehouse space to online retailers such as Amazon,” he said. “Its shares have suffered recently because of fears of a slowdown in online shopping, but we think the shares are still cheap to buy.”
Mr Birrell said infrastructure was a compelling place to park money while the rest of the market was falling.
“There has been a proliferation of trusts in renewable energy and energy storage, solar and wind,” he said. “These areas are not overly sensitive to the economy and do not always follow the rest of the stock market.”
The largest renewable energy infrastructure trust is Greencoat UK Wind, which has more than £4bn in assets. It has returned 25pc in the past 12 months alone. Greencoat and Warehouse Reit both trade at a 4.6pc premium to the value of their assets.