He added that investors would have been better off keeping their money in a regular savings account than investing in UK equity markets over the last 11 years.
According to Financial Express data, an investment in the UK equity market in January 2000 would now be worth nearly 2 per cent less than cash. The FTSE 100 returned 25 per cent over the period while CPI returned just under 27 per cent.
Performance of indices since Jan-00
Source: Financial Express Analytics
Many analysts are predicting a strong year for the markets, however, which could mean multi-asset funds that neglect equities are left behind in the short-term.
Equity bulls are pointing towards merger and acquisition activity and the strong position of UK companies focused overseas as a sign that the London Stock Exchange is in good health.
Mark Dampier, head of research at Hargreaves Lansdown, says that equity investment goes beyond capital returns.
"The argument falls down straight away," he said. "Income from dividends make a huge difference to equity investors. Comparing the FTSE 100 to CPI is not comparing like for like."
City Asset Management, however, is happy to miss out on some of the money to be made if it can offer investors decent returns and low volatility.
"We will underperform during equity market rallies but whilst it doesn’t sound very exciting, most of our clients are happy with 7 per cent annual returns," said Jeremy Rowe, sales manager at City Asset Management.
"That kind of return means investors will double their money every 10 years and won’t have to worry about waking up one day to find their net asset value has fallen 30 per cent."
Calder attributes a "hare and tortoise" analogy to the performance of the UK equity market over the last decade and says that the majority of investors would forgo high volatility in favour of the relative safety offered by multi-asset funds.
"Time and again we see that equities race ahead but then, while they are resting under a tree, the multi-asset funds make up the ground," said Calder.
"Don’t be put off by consistently small returns, they do add up. There is a saying that has been attributed to Albert Einstein: 'Compound interest is the most powerful force in the universe.'"
Rowe says a multi-asset strategy is the best way to protect against volatility risk while giving the flexibility to move in and out of asset classes as opportunities present themselves. Funds are not limited by any asset allocation mandates and make use of alternative investments.
"City Asset Management has an agnostic view and doesn’t prefer any particular type of market," said Rowe. "By investing in hedge funds and commodities we believe we can offer lower volatility then those who manage traditional assets."
A City Asset Management portfolio aiming for CPI plus 4 per cent will typically have 34 per cent of funds invested in overseas equities, 22.5 per cent in UK equities, 17.5 per cent in fixed interest, 15.5 per cent in alternative assets and 9 per cent in commodities funds.
Mike Fitzhugh, investment director at City Asset Management, added: "We do invest in structured products. Though they have had some bad press, we believe they have become a lot more transparent recently."