While James Thomson believes "the time for buying pure defensive investments is over", the lessons learnt in 2008 mean the FE Alpha Manager is maintaining a significant exposure to stocks of this type. "I always think about the Warren Buffet expression when he said: 'You never know who’s swimming naked until the tide goes out,'" commented Thomson, who heads up the £142m Rathbone Global Opportunities fund."I think it was pretty clear in 2008 that I was swimming naked so I needed to evolve as a fund manager and I actually think that 2008 was one of the most instructive years for me to change my style



"From 2008 to today I have employed a weather-proofing scheme in my portfolio. I look for companies in defensive areas with reliable, predictive qualities but that also have an element of growth to their story, not simply companies that are simply reliant on the path of the economic cycle." According to data from FE Analytics, Rathbone Global Opportunities has been in the top decile for performance over three, five and 10 years. Since Thomson took over the fund in November 2003 it has returned 148 per cent compared with 65 per cent from the sector average.   Performance of fund vs sector since Nov-03 Source: FE Analytics 

Thomson added: "I’ve put money into tobacco and into the value end of retailers. Those are areas which are more insulated from the economic cycle and have done well over the last few years, protecting the fund for those roller-coaster moments." However, the manager acknowledges that the world is beginning to turn in favour of cyclical stocks and he is positioning his portfolio to participate in the rally. "The time for buying pure defensive investments is over," he explained. "While I like to keep the weather-proofing element in my portfolio I’m not putting any new money there. In fact over the last few weeks I’ve been getting more bullish on the equity markets in the short-term. I see leading economic indicators rising in the US and inflation is falling, which will act as a stimulus for consumers." While Thomson’s style is principally a bottom-up stock-picking approach, he says that the current economic environment is forcing him out of a number of areas. "In this day and age you really have to be a jack of all trades and there are a number of specific sectors that I am looking to avoid," he said. "The first is banks. I find the banking sector to be an opaque industry and also one that is really struggling at the moment – net interest margins are under pressure and the sort of financial innovation that really drove growth over the last decade has proved to be a mirage." The manager is also avoiding China, saying he is worried about dangerous imbalances in its economy. "There is a heavy reliance on the export and manufacturing sector and there is also a heavy reliance on fixed asset investment – properties, manufacturing facilities and infrastructure," he warned.