However, London’s blue chip index stumbled last week, slipping back down to 6,250 points from its high of 6,530 points in mid-March, raising concerns the markets may follow the pattern of the last two years and suffer a correction in the summer.
Performance of index in 2013
Source: FE Analytics
The overarching question for investors now is whether the dip should be taken as a sign that it is time to take profits and put money into more defensive holdings or whether it is a temporary hiccup that has created a buying opportunity.
Hargreaves Lansdown’s Richard Troue (pictured) says that while there are undoubtedly still risks on the horizon, sustained low interest rates and meagre returns from cash are good reasons for investors to keep money in the market. "For investors seeking a return on some part of their money, they need to invest in the stock market," he said.
"Now could certainly be a good time to invest."
Troue recommends investors keep a balanced portfolio comprised of core UK holdings and higher-growth options such as small caps or emerging markets.
"You should hold some of your portfolio in good, large, high-yielding companies that still have quite tasty dividends coming through to compensate [for low growth]," he said.
He adds that investors should mix these holdings with more conservative funds such as Sebastian Lyon’s five crown-rated Troy Trojan portfolio or FE Alpha Manager Iain Stewart’s Newton Real Return portfolio.
"You need to keep the faith and keep your long-term head on," Troue said. "You need not be afraid to take a bit of profit and recycle it into areas that haven’t done so well."
The analyst tips healthcare, mining and commodities as sectors that could be poised to surge.
Healthcare stocks have had a particularly strong year and FE Trustnet will take an in-depth look at outperforming funds in the sector in a subsequent article this weekend.
Although not for the faint of heart, Troue thinks the volatile mining and commodities sector is set to rally, not least because it has gone through such a difficult period of late.
"Mining has had such a turgid time," he said. "Corporate management hasn’t helped there either, but some economic concerns have been addressed and we’ve seen wide-scale management change."
"Now could be the time to start looking at the area again."
However, Troue says the inherent volatility of the sector makes it better suited for investors who can drip-feed their investments in through the year, rather than invest a lump sum and risk a painful loss if things take a turn for the worse.
Within the sector, Troue recommends the £1.5bn JPM Natural Resources and £650m First State Global Resources portfolios.
For exposure to gold mining stocks, he tips the four crown-rated BlackRock Gold & General fund, headed up by FE Alpha Manager Evy Hambro.
He also likes FE Alpha Manager John Dodd’s Artemis Global Energy fund, which he says is looking more attractive in the current market.
Rowan Dartington’s Tim Cockerill (pictured) is more cautious than Troue and says there is likely to be a better buying opportunity later on in the year.
"A lot of investors have been anticipating a hiccup, and a bigger one," he said. "The high point we hit in March and the point where we are now are not a lot to get excited about." "The market would have to fall to 6,000 or below to be a real buying opportunity. If that happens, yes, that’s definitely a buying opportunity, but it depends on what brings the market back down."
"In the meantime, there are still risks that we’ll get more poor numbers out of the US, which could trigger another sell-off," he said.
Cockerill says that while it may be best for investors to bide their time before they commit themselves, they should be looking to invest with at least a five-year view, in which case he says buying now would not be such a poor decision.
However, he, like Troue, thinks it is best to drip-feed money in to take advantage of a likely correction later on in the year.
"You can put some money in now, but bide your time for the next bit because with the US and problems in Europe and Cyprus, there are circumstances that could push the market lower," he said.
"I’d be slightly cautious but wouldn’t be averse to putting some money in at this point, but you need to be long-term. Hold some money back because you might be able to put it in at a lower level."