Market bears have shown concern towards rising equity prices and have suggested that the sheer amount of inflows into the market means it is heading towards a crash. However Curtis (pictured), who has managed the five crown-rated City of London IT since 1991, says that there is no reason to be alarmed as equity valuations hit much higher levels during the bull market of the 1990s.
"Equity markets have performed well and although there may be parts that are now expensive, there are certainly still areas that are undervalued," he said.
"Ten-year gilts are yielding just 1.6 per cent and 30-year gilts 3.1 per cent, plus you are receiving no capital growth on them."
"The UK dividend yield is 3.4 per cent, which is good, but I have seen higher in my career."
"But what is striking is how much higher fixed income yields used to be."
"On a P/E [price/earnings] basis, the UK market used to be below 10x in 2010, which was very cheap, and it is good to see that it has moved up from that level. However, at a P/E of 14.7x it is hardly overstated."
"In the 1990s, equities were a lot more expensive and became even more expensive during the next decade."
Curtis also remains positive on the outlook for the global economy and is encouraged about how accommodating policy-makers have been in trying to tackle the huge levels of debt in the system.
"Overall, my view on the markets hasn’t changed. The underlying problem has been the massive pile-up of debt from the 80s and 90s that over the last few years has only levelled off," he explained.
"This has meant that governments have had to take part in a painful period of deleveraging, but of course we invest in companies, not economies."
"The positive thing is that policy-makers are doing something, through quantitative easing and ultra-low interest rates."
"That gives me reason to be optimistic and it is a good environment to be investing in equity income."
He also points to diminishing headwinds for Europe, China and the US.
He commented: "In Europe, policy-makers are strongly committed to the Europe and no-one wants to see it fail. However, the growth in Europe and the UK is pedestrian at best, especially compared with emerging markets."
"In the emerging markets, especially China, there is a move to a consumer-driven economy."
"We like companies that can benefit from this emerging middle class and gain top-line growth from the emerging markets."
"The US economy, despite its fiscal issues between the Democrats and the Republicans, is in recovery."
"There is no doubt that the US housing market is much healthier, which was the epicentre of the problem during the financial crash."
"The continuing growth in the emerging markets and the positive outlook in the US recovery are both very good for the global economy."
According to FE Analytics, the £825m City of London IT has returned 198.41 per cent over 10 years, while the IT Growth & Income sector and the FTSE All Share have returned 186.88 per cent and 148.43 per cent, respectively.
Performance of fund vs sector and index over 10yrs
Source: FE Analytics
The closed-ended fund has a heavy bias towards large caps, with this area of the market accounting for 75 per cent of AUM.
Curtis says he takes a value-driven approach towards stock selection, but adds that income is also "very important".
City of London IT currently yields 4.08 per cent. More importantly it has increased its dividend in each of the last 46 years.
Curtis says maintaining a cautious outlook on equity markets has been the cornerstone of the trust's success, particularly with regard to income.
"The key to this is that we don’t fully distribute the dividend in a good year," he continued.
"In the year between June 2007 and 2008, the earnings per share were 13.5p, but we actually paid out 11.6p in dividends per share – meaning we only paid back 85.7 per cent."
"It means when it is a difficult time for markets we can smooth out the dividend by using the revenue reserves."
Curtis says that in 2011 when many companies were having to slash their dividends, the City of London IT was able to draw on its reserves to boost its payout from 13.17p to 13.2p per share.
The trust is geared at 8 per cent, which is quite low for Curtis. The manager says he expects to increase this towards the end of the year, because he feels markets could have a tough time in the coming months.
"After a good run, I could see markets moving sideways over the summer. There is the saying 'sell in May and go away, don’t come back 'til St Leger’s Day' – I think that could be the pattern this year."
"However, I am still positive on a one-year plus view and I definitely think that equities are the best place to invest your money at the moment as they are not expensive in historical terms and they are yielding more than bonds."
"There are a number of macro issues that could flare up over the next few months, but I would expect to be increasing the trust’s gearing in the third quarter this year. I think markets will really move forward by the end of the year."
City of London IT has an ongoing charges figure (OCF) of 0.45 per cent and is trading on a 2 per cent premium to its NAV.