Henderson's Burvill: Why equities could rally 20% this year

Henderson's Chris Burvill has forecast global equities could rally by as much as 20% in 2012 if more positive economic data continues to be seen from major economies.

The manager of the £805m Henderson Cautious Managed fund said equity markets are gearing up for a tough 12 months, with sentiment depressed. But in this environment he said any positive surprise could prompt those waiting on the sidelines to pile in, in anticipation of a rally.

"If news improves then investors will move into equities very quickly. I would urge investors to get in now. Equities rallying by up to 20% this year is perfectly possible," said Burvill.

The MSCI World is down 8.14% over the last year (to 16 Jan), and Burvill said it could charge higher if newsflow improves.

The manager has recently increased the equity weighting in his Cautious Managed fund, adding 8% over the past four months.

He currently holds 50.7% in equities, 44.7% in bonds and 4.6% in cash.

Burvill's positive stance challenges well known bears including Jim Rogers, who have gloomy outlooks for the global economy this year.

"It is difficult for us reared on a diet of growth, if we cannot see the growth, then why would we buy equities? But if you look back over the past 100 years, the link between growth and markets is not that strong," he said.

"If you look back to the 1970s, our parents would have had greater economic worries, and in the 1940s our grandparents would have had even more to worry about. To think our time is much worse is a little presumptuous."

He pointed to positive data in the US as an encouraging sign, specifically highlighting the fact that US consumers are de-gearing but still spending at the same time.

"The US is a model for us to follow," he added.