Having previously hit the 6,800 level, the FTSE 100 has retreated substantially over the last few weeks and at the time of writing is at 6,338.
Although it us up 9.82 per cent this year, the graph below shows a clear correction in UK equity markets over recent weeks.
Performance of index year-to-date
Source: FE Analytics
However, Marchant says that although volatility may well remain, the outlook for equities over bonds still looks good.
"Do you want to be buying equities now? I would say yes," he said. "It is a mug's game trying to predict short-term market movements, and equity prices may be lower next week, but our long-term view is a bias to equities over bonds."
The manager says that it is not surprising that markets have sold-off recently, but that this is nothing to be overly concerned about. "We have had a very good run, as all the liquidity from the central banks' QE had to go somewhere," he said.
"However, there have been some recent comments from certain members of the Fed that they may taper their QE, which has unsettled markets and caused a wobble, but that is all it is – a wobble."
"Nothing fundamental has changed and global growth is improving, the pull-back over recent days can best be attributed to a period of over-exuberance more than anything. We had actually taken a bit of profit [prior to the recent falls]."
The manager is confident about the outlook for shares and says any investor who thinks that the world central banks will stop their stream of stimulus measures is wrong.
"I don’t think it is a good time to stop QE and I can’t see it happening for a long time," he said.
"If it were to happen, it would certainly be damaging, but all this liquidity is very addictive and markets need to be weaned off it gently."
He is not too concerned about a possible hike in interest rates either, as the economy is still fairly fragile.
"I don’t see any inflationary pressures coming through so I can’t see why interest rates would go up. There is certainly no prospect of interest rates going up in Europe or the UK any time soon," he added.
Marchant has a wealth of experience managing funds in the IMA universe, having started his career in the mid-1990s. He currently runs the CF Canlife Balanced fund, having taken over the multi-asset portfolio in 2011.
According to FE Analytics, Marchant has returned 114.03 per cent over the last 10 years while his peer group composite is up 103.52 per cent.
Performance of manager vs peers over 10yrs
Source: FE Analytics
Overall, the manager has a reasonably bullish outlook and he says underlying fundamentals are improving, especially in the US, the market that traditionally drives the global economy.
"We are long-term investors and in terms of our asset allocation over the last few years, it has remained virtually unchanged – which has led to a lot of tedious asset-allocation meetings recently as we have been overweight to bonds since 2010."
"When you look at bonds now, gilts are yielding 2 per cent per annum while the UK equity market offers a yield of somewhere between 3.5 to 4 per cent. You don’t even need them to go up to beat the gilt market."
"What we have seen is that the world is looking slightly better. The US economy is strengthening as the housing market and consumer sentiment are improving. Of course there are pockets of weakness, like the US manufacturing sector."
Although he admits that growth in Europe has not been particularly strong, he says Mario Draghi’s Outright Monetary Transactions (OMT) programme has provided stability for continental markets.
"There are signs of improvement in the periphery as Ireland and Portugal have been able to issue new 10-year bonds. Even yields in Greek sovereigns have come down from 30 per cent to 10 per cent – though I wouldn’t advocate buying them," he commented.
Marchant is also positive on the UK, having seen more positive data coming out of the housing market, and expects the economy to look a lot stronger this time next year.
Darius McDermott, managing director at Chelsea Financial, also upped his equity exposure yesterday and says this is the best time to get into the equity market – even for someone with a relatively short-term outlook.
"I do think this is a buying opportunity, I absolutely do," he said.
"If you are looking for 12-month gains, it is now a much cheaper opportunity than it was two weeks ago. If it is a longer horizon, equities looked more attractive than bonds two weeks ago so now they look even better."
"We are all aware of the macro risks that are still out there, but markets brushed off Cyprus, they brushed off Italian elections and they brushed off the fiscal cliff and sequestration in the US."
"Markets had a look for about half a day and then said 'sod it', and they still went up."
"The latest issue which was the signal that QE would be slowed down, not turned off, has caused a wobble in the markets."
"Markets had got too ahead of themselves and that was a sharp reminder of the macro risks still out there."
"However, if you liked equities over bonds two weeks ago, you should really like equities over bonds now," he added.
