'Rates will rise soon - I am selling bond funds'

He said this move was to “interest-rate proof” the portfolio.

“In my opinion interest rates should be going up now, as 0.5pc is the emergency level but the economy is actually doing quite well,” he said.

“The market is expecting rates to rise next year; when they do rise investors will lose money on bonds. We are stepping to the side now because we do not want to produce negative returns for our investors.”

The bond funds Mr Brookes is still backing include M & G Optimal Income, managed by Richard Woolnough, and JPM Income Opportunity Plus.

Despite his cautious stance on both bond and equity markets, Mr Brookes said he was finding value in Europe and Japan. He owns the likes of Schroder European Alpha Income and GLG Japan Core Alpha.

“If you are buying today you are better off in the cheap areas such as Japan and Europe,” he said.

The funds I am backing

What are the alternatives?

Experts said Mr Brookes’s fund was one of the best available for cautious investors who did not have the confidence to pick their own funds.

Ben Willis of adviser Whitechurch Securities said: “The cautious funds it competes against contain some big names but Mr Brookes is definitely dining at the top table.”

He said Jupiter Merlin Income, managed by John Chatfeild-Roberts, was the most attractive alternative.

“Solid long-term performance has been the key to the Jupiter fund’s success, driven by some timely investment calls over the years,” said Mr Willis.

Patrick Connolly, a financial planner at Chase de Vere, said Mr Brookes was well positioned to protect investors’ money.

His alternative fund choices were the Investec Cautious Managed fund, overseen by respected investor Alastair Mundy, and JP Morgan Multi Asset Income.

“Mr Mundy is a genuine contrarian investor searching for unloved companies ‘in other people’s rubbish bins’ and then holding them for the long term until their price recovers,” Mr Connolly said. “This approach means he will have periods of underperformance but should produce good returns for patient investors.

“The JP Morgan fund is well diversified and can also take an aggressive approach to asset allocation to try to exploit the best opportunities.”

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