Mr Beagles told the Morningstar Investment Conference in London today that wage inflation pressures were building up because the UK was effectively seeing full employment with a record number of vacancies and unemployment falling fast.
He said wage inflation in the UK was likely to move up to 3% in real terms and this would put pressure on interest rates to move up to curb inflation sooner than expected if wage inflation cannot be controlled. Most experts have said recently that interest rates were unlikely to rise before 2016 and the Bank of England this week announced the base rate of 0.5% would remain unchanged.
Admitting his was a contrarian view compared to other speakers, he said he believed change was likely earlier rather than later because wage inflation pressures were being ignored but there were signs that wage inflation was already under way. He said: "We are on the cusp of a change."
In terms of UK equities, he said he believed that small caps had great potential over the next 12 months after a dismal time as one of the world's worst sectors in performance terms recently. He said he had 18% of his own UK equity fund in small caps, a record amount.
Focusing on small caps he said he was an active investor, taking up to a maximum of 8-9% in a company. He said: "We're owners of companies rather than passengers."
Mr Beagles talk was on the issue of whether Quantitative Easing had pushed up valuations in all asset classes. He said this suggested that there was no value remaining but he believed this was not the case, particularly for UK equities and small companies in particular.
He noted that stock markets around the world had reached record highs but there was no euphoria. He said this was because there had been expectations of recovery and many markets had further to go. In the UK he said the general election result had ended uncertainty and after a period of "terrible performance" the UK should be due "a bit of a catch up."
The Morningstar Conference is designed to help Financial Planners and Paraplanners keep their investment knowledge up to speed by hearing from leading fund managers and investment experts.
Among the leading speakers will be Steve Gazzard, chief executive of the IFP, who will lead the debate on the value of financial advice later today. He will chair a panel debate with a number of IFP members. Other key speakers include: Paul Mason, economics editor, Channel 4 News, Clive Beagles, senior fund manager JO Hambro Capital Management and John Bennet, director of European equities at Henderson Global Investors.
The 9th annual Morningstar Investment Conference is taking place at the Park Plaza Riverbank Hotel, London.
There is a Morningstar Investment Conference Mobile App avavilable at http://eventmobi.com/micuk2015/ and the conference Twitter hashtag is #MICUK.