View more on these topics

Mark Dampier: The small fund with a big ambition


When investing in global equities the options are vast. With a hunting ground spanning almost every country and sector, it is often assumed a manager requires a huge team of analysts behind them to run an international fund. Yet James Thomson of Rathbone Global Opportunities has thrived as part of a relatively small team.

His internal analysts cover around 20 per cent of his investments and he makes use of external analysts for the remaining 80 per cent. Both highlight new opportunities but he finds “speed dating” – meeting a number of external analysts in quick succession to hear their best ideas – particularly useful.

Despite the bull market of the past few years, Thomson is currently in an enviable position of having more opportunities than he has space for. He keeps the fund between 40 and 60 investments to ensure each can have a meaningful impact on performance, so for a new one to join, one needs to be sold.

The fund has historically had significant investments in small and medium-sized companies. However, it has grown to £750m in size and has daily inflows of around £500,000, which makes investing in companies smaller than $1bn untenable. That said, the manager still finds the most exciting opportunities among medium-sized companies with a market cap between $1bn and $5bn, so the fund remains invested in smaller stocks than many of its peers.

Thomson has changed very little about his approach since he began managing the fund in November 2003. However, following heavy losses through the 2008 financial crisis, he now has a greater focus on risk management and invests around 25 per cent in less economically-sensitive businesses, such as healthcare and food and beverages, to help shelter from any future stock market falls.

As a stock-picking investor, Thomson pays little attention to the constitution of the benchmark. He does not invest in emerging markets or Japan, as he does not feel he has the required expertise, and has no exposure to banking, utilities, telecoms or oil and gas. This can lead to erratic performance relative to the benchmark but his conviction has added value over the long term. For example, this positioning, along with good stock selection, resulted in exceptional performance through 2015 but held back relative returns early this year as trends reversed.

And while Thomson is principally a bottom-up investor, there are a number of themes running through the portfolio, including health and wellness, escapism and “masters of the web”. The former includes investments in invisible brace producer Align, which is particularly popular with adults unwilling to sport conventional braces, and food technologist Kerry, which works on removing sugar and salt content from food without affecting taste.

Under the umbrella of escapism, Thomson invests in two of the biggest gaming companies in the world: Activision and EA Games. Gaming companies used to be highly cyclical but since the introduction of in-game purchasing, and with games now primarily sold online, margins have improved dramatically and earnings are more stable.

Meanwhile, Amazon is an example of an investment made under the “masters of the web” theme. Despite the quantity of analytical research on the company, Thomson feels many investors have underestimated its potential. Amazon has been criticised in the past for over-investing in customer experience; however, the manager views this positively and expects it to cement its dominance and result in high levels of customer loyalty, which will benefit shareholders in the future.

Thomson is more bullish than most fund managers I have met recently.  Investors are confused by the plethora of events over the past few years and he has identified many opportunities among the volatility. The fund is a great option for long-term investors and would sit well alongside a more general vehicle covering emerging markets and Asia.

Mark Dampier is head of research at Hargreaves Lansdown


FCA to review absolute return funds

The FCA plans to include a review of absolute return funds in its asset management market study, according to reports. The FT reports that the regulator is investigating absolute return funds amid poor performance and the flood of money to the strategies in recent years. A spokesperson for the regulator told the newspaper: “We are […]


FCA spends over £1m on asset management study

The FCA has so far spent over £1m carrying out its study into competition in asset management. Following a Freedom of Information request submitted by Money Marketing, the FCA said the total costs of the market study stand at £1,000,370. The costs cover the period between 19 November 2015, when the study was launched, to […]

Woodford eyes offshore UK Equity Income fund launch

Woodford Investment Management is planning to launch an offshore feeder version of its £9.2bn Woodford Equity Income fund. A Woodford spokesperson says: “We are considering the launch of an offshore feeder fund for the CF Woodford Equity Income fund, but no decision has been made when to proceed at present.” In June, Woodford said it […]

Pension - thumbnail

David Cameron appoints former adviser to Tony Blair as new pensions minister

Following a cabinet reshuffle in light of last week’s general election, David Cameron has announced that Ros Altmann will be replacing Steve Webb as pensions minister. As the industry works with one of the largest reforms to the sector in almost a century, the former adviser to Tony Blair has been tasked with ensuring that the pensions revolution does not stray off track.

Planning now for the residence nil-rate band

Graeme Robb, senior technical manager at Prudential, writes about the residence nil-rate band and the advice opportunities it presents for you when tax year-end planning with your clients. On our Planning Matters hub, we considered a widow, Margaret, and a married couple, John and Anne, for whom the residence nil-rate band (RNRB) is influencing planning […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm