Cumming, who also runs the SJP Ethical fund, says that fluctuating market sentiment and generally low global growth means that companies that have performed well deserve to be trading on a premium.
"The current environment of distorted interest rates and continued uncertainty means that investors need to identify companies that can drive their returns going forward, maintain stable earnings and sustainably increase their dividend yields," he explained.
"These types of companies are by no means cheap, especially when you compare them to their historical valuations. However, the main element of investing at the moment is capital protection, so these companies deserve to be on a premium."
"That’s why we prefer to have a higher percentage bias in our portfolios to companies trading on a premium."
"There is no doubt that further opportunities will come up next year as market sentiment continues to fluctuate, but as a starting point for 2013, the best approach is to hold companies that give dividend payouts and are backed up by strong cash-flows – even though they are expensive," he added.
Cumming’s £91m SJP fund has returned 122.91 per cent over the last decade. This is more than double that of its benchmark – the MSCI World index – which has made 53.24 per cent in the same period.
Performance of fund vs index over 10-yrs
Source: FE Analytics
Cumming’s projection for the next few years is bleak; however, the manager says that this environment could throw up an array of opportunities for stockpickers.
He commented: "What we have seen is that equities are stuck in a trading range because of the fluctuating sentiment. There has been low general growth and the relief rallies we have seen are a result of open-ended unconventional monetary policies."
"The major problem is the amount of sovereign debt and any deal that is or isn’t made over the fiscal cliff will continue to weigh on general growth and will provide uncertainty."
"In our view, the period we are in is a type of 'seven years of fat and seven years of lean'. However, it took a lot longer than seven years to build up the level of 'fat' that we saw before the market crash."
"Despite this, negative sentiment doesn’t mean that certain sectors of the market should be feared," he said.
The manager highlights commodities as one sector that has been hit by negative sentiment, which is why he is looking to raise his exposure to this area.
"The markets tend to shoot first and ask questions later, so there are a number of sectors and companies that are getting tarred with the same brush," Cumming explained.
"We like the materials sector – expectations have come down quite sharply and so with that the prices of commodities and their volumes are coming down as well."
"I think this is unjustified; the market either shoots too far down or too far up in my opinion," he added.
According to FE data, Cumming’s SJP Ethical fund counts commodities-oriented companies such as Tenaris, Eni and EOG Resources in its top-10 holdings.
The fund has a total expense ratio of 1.64 per cent and requires a minimum initial investment of £1,500.