Rathbone Global Opportunities: April 2020 fund update

• James Thomson’s a rare breed, having only ever managed this one fund
• He’s demonstrated his stock picking talent over many years
• Both recent and long-term performance has been strong

How it fits in a portfolio

Companies able to grow sales and profits rapidly are often trendsetters. The rewards are potentially significant. But it can be a more volatile way to invest if the high expectations placed on companies aren’t met. The fund could work well alongside others focused on undervalued and out-of-favour companies. It could also be used to add global diversification to a portfolio, particularly if you’re positive on the prospects for US and technology companies.

Manager

It’s rare to find a manager who’s stayed with one fund their whole career. James Thomson is one of those. He took over Rathbone Global Opportunities in 2003, and it remains the only fund he’s managed. We admire that dedication. It means the fund fully reflects Thomson’s investment philosophy.

Because of his many years of experience, Thomson’s invested in all market conditions, including through the pain of the financial crisis. Although he didn’t come out unscathed, we think he came away from the experience a better manager. He learned valuable lessons and has shaped the portfolio differently as a result.

Thomson has a small but stable team around him. He doesn’t have the same level of resources as managers from larger fund groups, so he relies a lot on external research. We generally prefer in-house research but his record suggests he’s making good use of it.

We admire Thomson’s strong long-term track record and think he’s a talented stock picker. We expect him to continue delivering excellent results for investors, although there are no guarantees.

Process

As a global fund, the manager has the flexibility to look for companies anywhere in the world. He’s quite choosy where he looks though. He has the flexibility to invest in smaller companies and emerging markets which are higher-risk areas but he generally avoids these as he thinks they’re too risky compared to other areas. He also likes industries and sectors he thinks have growth potential and tends to avoid ones that are sensitive to economic cycles or rely on lots of investment to keep running.

Thomson invests in many 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 and there are no guarantees.

Culture

As the fund is the only one that Thomson manages, he’s totally focused on it. There are no others to distract him. He’s incentivised to focus on the longer rather than short-term performance of the fund. This aligns his interests with long-term investors, which we think is a good thing.

Corporate governance is important to the manager. Sometimes he’ll avoid a company if he thinks it’s not responsibly run. It’s also a big reason why Thomson doesn’t invest much in emerging markets, where he thinks corporate governance standards can be weaker.

We positively view Rathbones as a parent company. Having been founded in 1742 it’s got plenty of history and tradition behind it. But the company’s also moving with the times by aiming to be at the forefront of responsible investing. Importantly for the fund, the company allows Thomson the freedom to run it his way without imposing any ‘house views’ on him, although of course challenge and risk management is provided.

Cost

The fund’s available for an annual ongoing fund charge of 0.52%. This is among the lowest charges in the IA Global sector and we think it represents excellent value for a fund run by a talented manager. It’s normally offered at 0.78%, but we’ve negotiated a 0.26% saving for HL clients. Our platform charge of up to 0.45% also applies.

Performance

Thomson’s long-term track record is excellent. He’s grown the fund significantly more than the broader global benchmark since he took over the fund in November 2003*. Our analysis suggests that’s mainly down to his ability to invest in excellent companies, regardless of their size, sector or location. Remember past performance doesn’t indicate how the fund will perform in the future.

James Thomson's track record

Past performance is not a guide to the future. Source: *Lipper IM to 31/03/2020.

Past performance is not a guide to the future. Source: *Lipper IM to 31/03/2020.

Find out more about this fund including charges

Key investor information