Stock markets are likely to end the year above current levels, said a fund manager at Credit Suisse Asset Management who has increased exposure to stock funds in recent weeks.
Since May 9, when the FTSE 100 closed above 6,100, the index of top shares has fallen nearly six per cent on fears economic growth may fade and concerns over the future direction of interest rates and commodity prices.
London-based Robert Burdett, who co-manages £1.13 billion of multi-manager assets, said that prior to the stock market's downturn he had built up cash reserves of four to five per cent in his portfolios, which he has recently been investing.
Multi-managers hold a basket of funds, which are usually run by external fund managers.
Mr Burdett said he believed stock markets offered good value and that the downturn in investor sentiment did not mean the underlying economic or corporate environment had worsened.
"We've put cash to work on bad days. Markets have got enough good value to potentially end the year higher," he told Reuters.
"As yet there is no evidence to underwrite the concerns that the market is expressing. We're sticking with a relatively optimistic outlook."
He said he had increased his positions in a range of funds including Jupiter Financial Opportunities, UBS US Equity, Neptune European Opportunities, Cazenove European and Melchior North American Opportunities.
He has also invested in the IVI European fund, managed by Adriaan de Mol Van Otterloo, a former top manager at British fund firm Schroders.
Mr Burdett also said he was likely to hold on to investments in the Gartmore Corporate Bond and US Opportunities funds after last month's news that Nationwide Mutual Insurance will sell Gartmore to private equity firm Hellman & Friedman Advisors and current management.
Multi-managers may sometimes reduce or sell their holdings in funds if a firm changes ownership and they fear fund performance may suffer.
"It's a great outcome for the fund managers and investors... On the face of it there is increased incentivisation," he told Reuters.