Evans (pictured) adds that being able to ignore a benchmark is a key advantage of running a boutique fund. While inflows typically follow sectors that boom, these will almost inevitably go bust before long, and the manager believes sitting out fads and focusing on fundamentals instead is what has allowed him to produce strong long-term returns with low volatility.
"I think you can get carried away by fashion and what’s in vogue in the stock market and people get all fired up for something," he said.
"Because things are so benchmark-driven I had lots of trouble with the equity fund. I was told I had to have a benchmark, and I said 'why?'"
"It gives me other decisions to make, like whether I should be underweight or overweight a sector, and that’s something I don’t want to think about."
"If you manage to a benchmark you find you must have so much in banks and so much in a another sector and you create a whole set of problems for yourself that didn’t exist before."
IM Matterley Equity, which has five FE Crowns, is a £10m fund that gets little publicity, although it has seen inflows of almost £2m in the past year.
It sits in the top quartile of the IMA UK All Companies sector over five years, having returned 62.91 per cent. The average fund and FTSE 350 index have made 32.11 and 33.1 per cent respectively over this time.
The fund is also top quartile over three years.
Performance of fund vs sector and benchmark over 5yrs
Source: FE Analytics
The fund’s annualised volatility over this time is just 17.74 per cent, compared with 22.67 per cent from the index.
Evans says he is not concerned that his fund has lagged its peers in the recent rally, as he takes a longer-term view on his stock-picks.
"I tend to ignore market noise and excitement, so I do not buy and sell many stocks. December and January were pretty routine for me, so I was behind the game," he continued.
"The top-performing shares were banks, discount airlines like easyJet and Thomas Cook. Even retailers were in fashion."
"These things do make you think the market might be getting a bit toppy, when people start looking for recovery plays in the worst sectors."
"I am a long-term buy-and-hold manager and the turnover on my portfolio is very low," he added.
"January saw the best performance for the FTSE since 1989 but I didn’t make any changes to my portfolio. I added a stock in March which I have been thinking about for 18 months."
The stock is Petrofac, an oil and gas producer, which is not an obvious sector for a cautious manager.
Data from FE Analytics shows the company has had a rocky ride over the past year, down 18.67 per cent over this time.
Performance of stock over 1yr
Source: FE Analytics
The fund has 11 per cent in oil and gas, and Evans says that providing he can get the stock-pick right, dependable companies are available in the sector.
"With oil at $100 a barrel it means that it is worth getting the last drop out of the oil fields: the amount they can extract is growing and growing."
"The technology that they have to get it out is great and so with oil at $100 a barrel, it makes it worthwhile."
BG Group is another stock the fund holds in the sector.
"BG Group went from being the world’s most successful exploration company to being a more solid, predictable producer, almost the same place Vodafone was 10 years ago when it was the high-growth darling of the tech sector, before it became a utility and had better quality earnings," he said.
The manager says that he prefers to run a relatively concentrated portfolio and is happy to have high exposure to a particular stock or sector if that is where his conviction leads him.
"It’s what I like to call an 'entry-level' fund, which we don’t make too complicated. I prefer to do lots of research and then drill down into the companies that I like."
"Terry Smith has a phrase 'diworsification', which I like: the more stocks you have, the more you spread your risk and the worse the returns."
"If you want a FTSE tracker then buy one and get the returns of the FTSE," he said.
According to Evans, one of the long-term stories that investors have been over-looking in favour of short-term fads is the British engineering industry.
"There’s a big engineering industry in this country and it has not got a lot of coverage in the past few years," he said.
"Union leaders complain about Thatcher ruining the manufacturing industry but she didn’t: there are fantastic firms that are running along well even in the current environment."
"There are plenty of excellent companies, the Rolls Royces of their sector."
"You go to Renshaw for measuring equipment; for valves in pipelines you go to Weir Group. Companies like that have been around for donkey’s years while boom and bust has been and gone."
"At the beginning of the century, during the boom years, the last thing people talked about was Rolls-Royce, although they were even then brilliantly run and well-managed."
Evans also holds Inmarsat, a company that runs a satellite.
"It’s basically a telephone exchange in space which everybody uses, even the US military occasionally," he said.
He is steering clear of retailers and financials, even though some of the stocks in those sectors have seen a strong short-term rebound.
The only retailer he holds is Morrisons, although he says he currently prefers Sainsbury’s and is biding his time until the price is right.
IM Matterley Equity is available with a minimum initial investment of £1,000 and has ongoing charges of 1.59 per cent.