Investment managers Thurleigh remain cautious despite a phoenix-like rise in equity markets during March.

Edward Allen, Thurleigh Investment Manager, commented: "On the one hand, nothing has changed; the world continues along its recessionary path and the route to recovery is as uncertain as ever. As unemployment numbers rise, a deflationary spiral remains a fearsome possibility.

"On the other hand, we need to be aware that recoveries can be self-sustaining in a debt-fuelled world; confidence breeds confidence, and improving capital values increase the banks' ability to play their normal role in the economy." He added.

The firm's overall policy is to buy equities into falls and to sell into rallies in order to capture value from ongoing market volatility. It has increased exposure to corporate bonds and is taking on additional risk through commodities on the assumption that industrial activity must rebound from severely depressed levels.

Thurleigh is maintaining exposure to inflation-linked bonds because of concerns about the inflationary implications of quantitative easing.

Thurleigh manages portfolios on behalf of private clients and charities.

By Christina McLoughlin