CF JM Finn Global Opportunities Accumulation

As part of the Hargreaves Lansdown research team I get to meet a great number of fund managers. It's a great pleasure, especially when the manager involved is as enthusiastic as Anthony Eaton of JM Finn Global Opportunities Fund. So what makes Mr Eaton so passionate? Quite simply, it is the rapid pace and vast effects of globalisation, in particular the industrialisation and urbanisation of developing countries. China is the obvious example. The number of cities in China with a population of more than 1 million people has grown from 150 a few years ago to 173 now. Quite mind-boggling when you consider the US has just 9 such cities and Europe 36!

As with any great trend there are investment opportunities. Not only does the physical process of building cities and infrastructure create wealth on a local basis, but the demand for commodities and energy stimulates a myriad of other industries. Plus as cities get bigger and wealthier, and as people move from a subsistent standard of living to an urban one, they require more of everything - from consumer goods to processed food to luxury items.

Whilst the growth in usage of basics such as electricity, oil and food is slowing down in the developed world, it is still rapidly increasing in emerging nations such as India, China and Brazil. Similarly, the demand for all manner of goods is taking off due to increasing wealth and wages. Anthony Eaton believes the huge populations and burgeoning wealth of these countries is a far more important consideration than any slowdown in the West, and increasingly these populations are competing for the same resources and goods. This is the reason, he says, why copper sells for 3.5 times the cost of production, why good Bordeaux fetches $10,000 a bottle in Asia and why you wait up to 7 months for a new Volkswagen Golf.

To benefit from this trend Mr Eaton aims to buy companies that have 'pricing power' due to demand outstripping supply. As part of his analysis he looks to identify 'bottlenecks' in the global economy to see which companies have the greatest pricing power, and currently believes he has found one in manufacturing. He describes the situation in simple terms: "we have gone from having too few 'ingredients' to having too few 'machines' to mix the ingredients" - the result of a reduction in company expenditure in the recent years of economic turmoil. His investment thesis is simple: invest in profitable manufacturers whose products are experiencing high structural demand.

Commodities remain an important strand of this fund too, and Anthony Eaton highlights some interesting developments in the wake of market falls. Following a 25% decline in the copper price he notes the Chinese have started buying copper mining firms, effectively expressing the view that current prices represent good value. Buying existing mines can be a shrewd strategy as new mines often yield less than existing ones, a further factor restraining supply and supporting prices.

With this fund you are buying into the emerging market theme, but from a different angle, and often through developed market companies. Whilst the fund does invest in some higher risk, emerging markets, Anthony Eaton believes some of the greatest beneficiaries will be companies in the West as they tend to have the advantages of global scale and pricing power. The fund can be volatile, but for long-term, adventurous investors looking to harness what is potentially the defining investment trend of the next decade I believe it is an attractive fund.