So far this year, new money going into global investment funds has reached its highest level since 2004, as rising investor confidence has boosted funds inflows to a decade high.

By comparison, just a year ago, when equity markets were significantly lower that they are today, investment funds recorded a net outflow.

Part of this resurgence is due to a rotation out of bonds into equities as investors have become more confident about global growth prospects and expect interest rates to rise.

There is little doubt that we would not be seeing talk of recovery without the massive and unconventional central bank support over the past three years led by the Federal Reserve and so any talk of a slowdown or “tapering” has implications for global share prices.

However, markets are beginning to factor this in and are now more relaxed about the possibility of an early move to begin reducing stimulus, accepting that this would be the consequence of a sustainable economic recovery.

Nevertheless, for the recovery in corporate earnings to build, UK and US companies will need to have the confidence to invest in capital projects using the sizeable cash balances now held on their balance sheets.

Until now earnings growth and share prices have been driven by short term measures such as share buy-backs and special dividends, as the corporate sector has yet to find the appetite for investment in the necessary infrastructure which will drive future growth and earnings.

As a result, equities have moved out of fair value territory into relatively dearer ground but nevertheless, the bull market in equities still has further to run, based on the expectation that companies will regain the confidence to invest in earnings enhancing capital projects.

: : Mark Marshall is an investment manager with Charles Stanley & Co in Ipswich.