Himsworth, manager of CF Eden UK Select Opportunities, says equity investors need not worry about the UK’s poor economic data because there is little correlation between GDP figures and the FTSE’s performance. "I’m pretty happy with the rally we have seen in the equity markets at the moment. They may be slightly over-bought in this early stage but when you look back on the returns equities made last year, the shift is understandable," he commented.
"I think we could see a 10 per cent return from the FTSE this year or maybe even a bit more, because the stock market is a very different beast to the underlying economy."
"I think another shift we may see is more investors turning to growth over income."
"There is real strength in the markets at the moment and the FTSE All Share is only yielding around 4 per cent – which isn’t very high at all – especially as the RPI (retail price index) is over 3 per cent and growing."
He added: "However, to find this growth, people are going to have to look down the market cap spectrum."
An increase of 10 per cent on the FTSE 100 from the beginning of the year would see it hit 6,698.
FE data shows that CF Eden UK Select Opportunities' highest market weighting is to the FTSE Mid 250 – making up 46.6 per cent of the portfolio – followed by the FTSE Small Cap and AIM markets, which have a combined share of 25.8 per cent.
Like Thames River’s Gary Potter, the manager says investors need to look past the obsession with risk-aversion and ignore ultra-pessimistic newspaper headlines.
"Yes, there is an awful lot of doom and gloom out there and you could work yourself into a stupor if you worried about it too much. We are very good in the UK at being negative about things," he joked.
"It is easy to get sucked into worries such as Japanese inflation and how this could cause its bond market to blow up, or the US debt ceiling; but the majority of this has already been priced into the market."
"It is crazy to try and speculate on the macro as it could all go to pot next week or in a couple of years."
"I want to find businesses where the management team dictates where the company goes, rather than external factors."
Himsworth has managed the £34.2m UK Select Opps fund since its launch in 2011. Over that time it has returned 25.87 per cent while the IMA UK All Companies is up 22.58 per cent.
Performance of fund vs sector and index since September 2011
Source: FE Analytics
It has also beaten its benchmark – the FTSE All Share – over that time, but has been more volatile.
Himsworth has a long track record, having previously run funds at Gartmore before its takeover by Henderson Global Investors.
Over the last decade Himsworth has returned 296.07 per cent, double the returns of his peer group composite.
Himsworth says that in order for him to outperform, he maintains a very active management style.
"One of the crucial parts of my portfolio construction is that I have to concentrate on returns for my investors – not fall in love with a company."
"In order to do this I’ve got to determine what I’m happy to pay for a company, using my own research and the help from contacts I’ve built up over the years. Some people will say that’s too high or too low – I don’t care – I want that difference of opinion so that I can sell it on."
"It’s like a Volkswagen Golf, you know they should cost around £15,000 so if you saw one advertised for nearly £30,000 you would avoid it – but if you saw one costing £10,000 you would buy it."
"I don’t really ever have a problem with a company but if I think a price has become too elevated I will sell. Even if the price does get higher I will be patient and usually there will be a big fall."
"There is always the argument that you should hold it for a long time and make, say, a 10 per cent profit, but I prefer to take the chance and try to make 30 per cent by selling at the right time and knowing what I’m prepared to pay."
"Because of this, the turnover rate in the portfolio is very high," he added.
CF Eden UK Select Opportunities requires a minimum investment of £1,000 and has a total expense ratio (TER) of 1.96 per cent.
The fund is run by City Financial.