Matthew Hunt: Emerging markets are overvalued

Prospect’s equity plays are predominantly defensive as well, owing to the firm’s fears regarding negative price momentum and an anticipated drop in corporate earnings in the months before the year end.

Hunt said that key indicators, including measures from the Consumer Metrics Institute, are now pointing towards a second downturn in the US, with demand now falling as consumers retrench.

‘It’s fair to say that the UK and Europe may not follow to the same degree, but the sentiment is still going to be negative,’ Hunt argued, adding that figures from the institute suggest the second downturn could be on a similar scale to the crisis witnessed in 2008.

‘It is a leading indication that the downturn could be similar to that seen in 2008. Both momentum and economics are quite negative, so we take the view that we need to be quite negative,’ Hunt (pictured) said.

The investment manager currently favours telecom and wireless communication stocks, utilities and companies that could benefit from government outsourcing.

‘A second way of being defensive is to look at alternative investments,’ Hunt added, highlighting investments in life settlement policies as a popular theme at Prospect.

Other companies favoured by Hunt, a former Citywire Wealth Manager cover star, include Prestige Alternative Finance, a finance firm which specialises in providing farmers with loans to buy agricultural equipment.