Our View
James Thomson’s success can be put down to a straightforward, disciplined approach, and a willingness to view the world a little differently.
He looks for easy to understand businesses that can grow to dominate their industry and defend themselves from competition. He’ll also search off the beaten track to identify companies with superb potential that might be overlooked by other investors.
These types of company are few and far between, so he only invests in a small selection. This gives each the potential to contribute significantly to performance, but it does increase risk, as does the flexibility to invest in smaller companies and emerging markets.
The results have been excellent. James Thomson is one of only a few global fund managers to demonstrate an ability to pick great companies and perform better than the broad global stock market over the long term. We believe he has the potential to repeat this success in future, although there are no guarantees. The fund remains on the Wealth 150 list of our favourite funds.
Performance review
James Thomson typically seeks companies that offer superior sales and profits growth relative to their peers and the overall stock market. Companies growing faster are often trendsetters and investors expect them to keep up their superior growth for a long time to come. PayPal, Amazon, Rightmove and Tencent all feature in the fund, for example, and all have seen their share prices rise in recent years, partly off the back of high expectations for future growth. This has benefited the fund’s performance.
Rathbone Global Opportunities - performance under James Thomson's tenure
Past performance is not a guide to the future. Source: Lipper IM to 31/03/2018
| Annual percentage growth | |||||
|---|---|---|---|---|---|
| Mar 2013 -
Mar 2014 |
Mar 2014 -
Mar 2015 |
Mar 2015 -
Mar 2016 |
Mar 2016 -
Mar 2017 |
Mar 2017 -
Mar 2018 | |
| Rahtbone Global Opportunities | 11.6% | 19.2% | 5.1% | 23.9% | 10.9% |
| FTSE All World | 6.8% | 19.2% | -0.5% | 33.1% | 2.9% |
| IA Global | 7.1% | 16.3% | -2.7% | 29.2% | 2.7% |
Past performance is not a guide to the future. Source: Lipper IM to 31/03/2018
The downside, as you might imagine, is that investors can get ahead of themselves. Growth stocks aren't always making money, and just like any other business they are vulnerable to speculation, regulation, competition and political interference. When there is any hint the lofty expectations might not be met, share prices can fall back to earth with a bump. We’ve seen this recently with Facebook and Amazon, among others.
James Thomson is fully aware of the risks, but is ultimately prepared to take the rough with the smooth over the short term, providing he believes in a company’s long-term potential. He bought Amazon, for example, when it wasn’t particularly popular and has been willing to stick with it through the bumps in the road. In contrast Facebook was recently sold as he believes the company’s pursuit of profit has come at the expense of consumer trust.
He also aims to have part of the fund invested in companies whose fortunes don’t just ebb and flow with the economy, or that only do well when companies and businesses feel positive about their finances. Food & drink, healthcare, and even pest control, remain consistently in demand, so these types of company can offer growth even when the economy is struggling.
Heineken, the brewing giant, Abiomed, maker of the world’s smallest heart pumps, and Rollins, a global pest control firm, fall into this category and all feature in the fund.
The overall aim is to create a fund with strong growth potential that is not beholden to a single event or outcome. James Thomson learnt this lesson during the 2008 financial crisis when there were too many economically sensitive companies in the fund and performance suffered.
We like the approach and how it has evolved, but it’s still a higher risk option in the global sector. The combination of entrepreneurial and innovative companies, with those able to achieve more stable growth, and an avoidance of overly complicated or speculative businesses, will serve long-term investors well, in our view.
Please read the Key Features/ Key Investor Information in addition to the information above.
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