The equities fund manager believes having a range of stocks in high quality companies with predicable earnings will combat drops in portfolio performance in weak markets.
"In the current environment of low credit growth, moderating commodity prices and weak investor sentiment, both economic and capital activity will be subdued," Hyperion portfolio manager Jason Orthman said.
"What investors should be looking for is a quality portfolio of stocks that can grind out earnings and dividend growth well above GDP."
A low number of initial public offerings (IPOs) have been a cause of concern for many investors, whose experience in capital markets stem from the tech boom of the 1990s and the resources boom immediately prior to the GFC.
While IPOs can deliver short-term high returns in a bull market, often in the first day of listing, Hyperion have said capital markets activity should be seen as only part of a broader investment portfolio.
"We think better gains are to be made from early identification of listed stocks whose track record suggests they can grow into ASX300 or even ASX100 companies," said Mr Orthman.
"In the last five calendar years IPOs have been running at less than 25 per cent of the average in the five years prior to the CFC."
