The Analyst: Pursue the new industrial revolutions

Great Britain began the process of industrialisation in the 18th century, turning what had been a subsistence economy into a fully developed economy through technological innovation. This is the position in which some emerging nations, such as China and India, are today.

Industrialisation increases living standards, which in turn increases the demand for basic necessities. When the United States went through this period of change, the country's electricity consumption increased 124-fold, oil consumption rose 35-fold, and meat consumption rose by about 80 per cent as real incomes grew from $5,000 to $20,000. This rapid pace of advancement brings opportunity for investment.

There is now a race to meet the electricity, oil and food demands of China, India, Russia, Brazil and other emerging economies.

James Thomson, the manager of the Rathbone Global Opportunities Fund, has positioned the portfolio into companies likely to benefit from this 21st-century industrial revolution.

It is not an average global growth fund; it is a spicy portfolio containing 50 to 60 of Mr Thomson's best ideas. Ultimately, he is looking for companies he believes can grow significantly, but where this potential has not yet been recognised by the wider market.

Some of these may be companies that many investors haven't heard of, but this is precisely what he likes – to identify undiscovered growth companies across the world. This style often leads him into small and medium-sized companies, so it's not surprising to find that the fund has only 26 per cent invested in larger companies.

He typically invests in companies that are at an early stage of growth, preferring innovative businesses with entrepreneurial management and simple products. This is not a "recovery" fund; instead, he likes to invest in proven businesses that are already firing on all cylinders.

A classic example of a stock he likes is Accsys Technologies. It treats softwoods chemically to give them all the benefits and longevity of hardwood. The beauty of it is that the treated softwood should be significantly cheaper than hardwood once in full production. This is a simple and effective idea, and one that has yielded excellent returns for the fund so far.

Rather than investing directly in, for example, a big oil company, or agricultural produce such as wheat or corn, Mr Thomson harnesses these growth opportunities indirectly through mining equipment, agricultural equipment, oil services and fertiliser. He believes these companies are less dependent on the movements of commodity prices and should withstand price volatility.

If companies are vulnerable, Mr Thomson is not afraid to cut the position. The fund's cash position is currently 14 per cent. This is purely a function of selling stocks that he believes are at most risk of being downgraded by analysts.

There are thematic elements to this portfolio, but it is ultimately a stock-picking fund with companies chosen primarily on their individual merits. Examples include a Bollywood film studio, an aircraft seat manufacturer and an online gambling stock – so there is healthy diversification.

The geographical weightings are also well spread; the portfolio is currently 26 per cent in Europe, 20 per cent in the US, 19 per cent in the UK, 13 per cent in Asia, 8 per cent in Canada, and the rest in cash.

The fund does not own companies listed in emerging markets, but gets the exposure through the UK AIM market and Canadian listed companies, for example. This is quite unusual in that the fund has delivered superb returns without directly investing in emerging markets.

Since Mr Thomson has had day-to-day management of the fund, it is up by 128 per cent, while the MSCI World Index is up 42 per cent (Source; Lipper: from 31 October 2003 to 15 February 2008). It ranks as the third-best performing fund in its peer group over this period (although note that past performance is not a guide to future returns).

It surprises me that, with this record, the fund is only a minnow, at £67m. The advantage of being small and nimble is that it can invest further down into smaller companies, where higher growth opportunities can exist, but there is still plenty of room for the fund to grow without its size becoming a problem.

This is a high-octane fund that can be volatile over shorter periods, but it is one that deserves greater recognition. You only have to look at the calibre of the individual managing this fund. James Thomson is a rising star, in my view, and has the ability to deliver superior long-term returns.

Meera Patel is a senior analyst at Hargreaves Lansdown, the asset manager, financial adviser and stockbroker. For more information on the funds included in this column, visit Mark Dampier is away

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at

Life and Style
Powdered colors are displayed for sale at a market ahead of the Holi festival in Bhopal, India
techHere's what you need to know about the riotous occasion
Arts and Entertainment
Larry David and Rosie Perez in ‘Fish in the Dark’
theatreReview: Had Fish in the Dark been penned by a civilian it would have barely got a reading, let alone £10m advance sales
Details of the self-cleaning coating were published last night in the journal Science
Approved Food sell products past their sell-by dates at discounted prices
Life-changing: Simone de Beauvoir in 1947, two years before she wrote 'The Second Sex', credited as the starting point of second wave feminism
peopleHer seminal feminist polemic, The Second Sex, has been published in short-form to mark International Women's Day
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Evening Administrator

    £8 per hour: Recruitment Genius: This Pension Specialist was established early...

    Guru Careers: Executive Assistant / PA

    £30 - 35k + Bonus & Benefits: Guru Careers: We are seeking an Executive Assist...

    Ashdown Group: Graduate Application Support Analyst

    £25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

    Reach Volunteering: External Finance Trustee Needed!

    Voluntary post, reasonable expenses reimbursed: Reach Volunteering: Would you ...

    Day In a Page

    Homeless Veterans campaign: Donations hit record-breaking £1m target after £300,000 gift from Lloyds Bank

    Homeless Veterans campaign

    Donations hit record-breaking £1m target after huge gift from Lloyds Bank
    Flight MH370 a year on: Lost without a trace – but the search goes on

    Lost without a trace

    But, a year on, the search continues for Flight MH370
    Germany's spymasters left red-faced after thieves break into brand new secret service HQ and steal taps

    Germany's spy HQ springs a leak

    Thieves break into new €1.5bn complex... to steal taps
    International Women's Day 2015: Celebrating the whirlwind wit of Simone de Beauvoir

    Whirlwind wit of Simone de Beauvoir

    Simone de Beauvoir's seminal feminist polemic, 'The Second Sex', has been published in short-form for International Women's Day
    Mark Zuckerberg’s hiring policy might suit him – but it wouldn’t work for me

    Mark Zuckerberg’s hiring policy might suit him – but it wouldn’t work for me

    Why would I want to employ someone I’d be happy to have as my boss, asks Simon Kelner
    Confessions of a planespotter: With three Britons under arrest in the UAE, the perils have never been more apparent

    Confessions of a planespotter

    With three Britons under arrest in the UAE, the perils have never been more apparent. Sam Masters explains the appeal
    Russia's gulag museum 'makes no mention' of Stalin's atrocities

    Russia's gulag museum

    Ministry of Culture-run site 'makes no mention' of Stalin's atrocities
    The big fresh food con: Alarming truth behind the chocolate muffin that won't decay

    The big fresh food con

    Joanna Blythman reveals the alarming truth behind the chocolate muffin that won't decay
    Virginia Ironside was my landlady: What is it like to live with an agony aunt on call 24/7?

    Virginia Ironside was my landlady

    Tim Willis reveals what it's like to live with an agony aunt on call 24/7
    Paris Fashion Week 2015: The wit and wisdom of Manish Arora's exercise in high camp

    Paris Fashion Week 2015

    The wit and wisdom of Manish Arora's exercise in high camp
    8 best workout DVDs

    8 best workout DVDs

    If your 'New Year new you' regime hasn’t lasted beyond February, why not try working out from home?
    Paul Scholes column: I don't believe Jonny Evans was spitting at Papiss Cissé. It was a reflex. But what the Newcastle striker did next was horrible

    Paul Scholes column

    I don't believe Evans was spitting at Cissé. It was a reflex. But what the Newcastle striker did next was horrible
    Miguel Layun interview: From the Azteca to Vicarage Road with a million followers

    From the Azteca to Vicarage Road with a million followers

    Miguel Layun is a star in Mexico where he was criticised for leaving to join Watford. But he says he sees the bigger picture
    Frank Warren column: Amir Khan ready to meet winner of Floyd Mayweather v Manny Pacquiao

    Khan ready to meet winner of Mayweather v Pacquiao

    The Bolton fighter is unlikely to take on Kell Brook with two superstar opponents on the horizon, says Frank Warren
    War with Isis: Iraq's government fights to win back Tikrit from militants - but then what?

    Baghdad fights to win back Tikrit from Isis – but then what?

    Patrick Cockburn reports from Kirkuk on a conflict which sectarianism has made intractable