Buxton, who is head of UK equities at Schroders, says that valuations are the key to future returns and as they are far lower than they were 10 years ago, investors can afford to be bullish. "Starting valuations – not the economic outlook – are the key to future returns," he said.
"From a 22x multiple 10 years ago, you would have struggled to make money from investing in equities even if the macroeconomic environment had been much better."
"If history is any guide, then from today’s valuations – a P/E multiple of 11x – the next 10 years should provide positive real returns for investors, possibly double-digits per annum, despite the economic headwinds we face."
He added: "I am much more optimistic about the returns from UK equities over the coming decade than I was 10 years ago."
Buxton, who manages a number of UK-focused portfolios including the Schroder UK Alpha Plus fund, says that tensions surrounding the three major macro concerns – the US fiscal cliff, China’s slowdown and the eurozone crisis – will ease in 2013.
In terms of the eurozone, Buxton is optimistic the crisis will be resolved.
"Much progress has been made this year in the multi-year evolution towards fiscal union and the appropriate mix of austerity, reforms and fiscal transfers; expect further progress in 2013," he said.
The manager believes that equities will surge regardless of how the economy performs, because UK companies have strong balance sheets, good cash flows and rising dividends.
"We know there are lots of negatives in the macroeconomic environment and lots of headwinds to growth, but it is widely known and is reflected in prices. Economic growth and equity markets do not correlate."
"Growth could be subdued, but a lessening of extreme fears could see equities re-rated nevertheless."
"The fund-flow statistics and negative sentiment towards equities suggest that the 'pain trade' for most investors is for the equity market to surprise commentators on the upside over the coming years because people don’t have enough equity exposure."
"I believe we can say we have already passed the low point for UK equities – below 3,500 on the FTSE 100 index twice in the last 12 years – and are in the foothills of a new bull market."
Over a lengthy career in fund management, Buxton has consistently outperformed his peers.
Performance of manager vs peers over 10-yrs
Source: FE Analytics
According to FE Analytics, the manager has returned 141.84 per cent over the last decade, while his peer group composite has made 120.95 per cent.
His £3bn Schroder UK Alpha Plus portfolio boasts top-quartile performance over one, five and 10 years.
It has tended to be more volatile than the IMA UK All Companies sector average, however.
FE data shows that Schroder UK Alpha Plus is a concentrated portfolio of 37 holdings and has a bias to large cap UK firms. Blue chip corporates such as GlaxoSmithKline, Legal & General and Royal Dutch Shell feature in its top-10 holdings.
The fund has a total expense ratio of 1.66 per cent and requires a minimum investment of £1,000.