VIDEO: Rathbone Global Opportunities - opportunities among outcasts

• James Thomson’s recently invested more in the US and less in the UK
• Consumer services companies helped the fund beat its benchmark over the past 12 months
• He thinks companies with high growth prospects are becoming harder to find

Our view

James Thomson invests in companies shunned by others but where he sees the potential to grow over the long term. That might include companies considered boring, or ones that’ve done well for a few years and other investors think the best growth is behind them. Some of his investments appear far from shunned though, like trillion-dollar technology company Amazon. But Thomson invested in it several years ago, before it was popular, and stayed invested as it became an investor favourite.

We like that he invests differently to the global stock market, as it gives him the opportunity to beat it. As with any truly active fund manager though, it means there will also be times when he doesn’t do so well.

We think Thomson’s a talented stock picker. He’s got a strong long-term track record stretching back 16 years, so he’s managed the fund through the best and worst of markets. This is the only fund he manages so he’s focused on it entirely, rather than splitting his time across several. Rathbone Global Opportunities deserves its place on the Wealth 50 list of our favourite funds. Thomson’s delivered excellent long-term results for investors, and we expect that to continue, although nothing’s guaranteed.

How's the fund performed?

Thomson’s long-term track record is excellent. He’s grown the fund 621.3%* since he took over the fund in 2003, compared with a 334.9% gain for the broader global stock market. Our analysis suggests that’s mainly down to his ability to invest in excellent companies, regardless of their size, sector or location.

The fund’s done well in the near-term too and has beaten the benchmark over the past 12 months. That’s partly down to good performance from consumer services companies. Recent investments in this area include UK online grocery retailer Ocado, US wholesaler Costco and French fashion company Kering, which owns brands like Gucci and Yves Saint Laurent.

Remember past performance doesn’t indicate how the fund will perform in the future. Investments can fall and rise in value and you may not get back what you have invested.

Past performance is not a guide to the future. Source: Lipper IM to 30/04/2019

Past performance is not a guide to the future. Source: *Lipper IM to 30/04/2019

How does the manager invest?

Thomson invests in easily understood companies he thinks have big advantages over their competition which should help them grow over the long term. Most of those are US companies, with the remainder in other developed countries like the UK and France. He isn’t keen on investing in higher risk emerging markets, as he thinks their different reporting standards make it harder to understand the companies.

Thomson isn’t put off by companies other investors might find dull, like care homes, rubbish collectors or pest control. He invests in all three. He admits these companies are unlikely to achieve stellar growth. But he likes to have part of the fund invested in these ‘all weather’ companies whose products and services are likely to be in demand however the economy’s doing.

Large companies make up most of the fund. Over Thomson’s career he’s shifted away from smaller companies although he can still invest in them. Smaller companies are higher-risk and he thinks buying and selling their shares can be difficult. He invests in some medium-sized companies though, which have more room for growth than larger ones but are less risky than small companies. If they grow into larger businesses, but he thinks they’ll keep growing, he’ll stay invested.

Manager's outlook:

Recent years have seen markets favour managers like Thomson, who invest in companies for their growth potential. Thomson doesn’t think that’ll change soon as he doesn’t expect the economic environment to change much either. But he also thinks good growth opportunities are becoming harder to find. He’s invested about a quarter of the fund in ‘all weather’ companies, which is the most it’s ever been. Their greater financial stability helped the fund’s performance during the market volatility at the end of 2018.

In recent years Thomson has invested more in the US as that’s where he thinks the best opportunities for growing companies are. That’s been at the expense of UK investments. Thomson is positive on some UK businesses – some of his best performers recently were UK companies. But he thinks some could be vulnerable to risks posed by Brexit. As a global investor, he doesn’t feel the need to take those risks and can look elsewhere.

Find out more about this fund including charges

Rathbone Global Opportunities key investor information