While Thomson, who is rated a Trustnet Alpha Manager for his outperformance of his peers, is looking for defensive stocks to buoy his portfolio, he also expects those companies to have good growth prospects, and to fly under the radar.
Performance of James Thomson over 1-yr vs peer group
Source: Financial Express Analytics
This means that, while the manger is snubbing traditionally defensive plays like tobacco company British American Tobacco, he has recently upped his stake in Swedish Match, a Scandinavian group which makes the tobacco product Snus. The product is a variant of snuff, popular in Sweden, which is placed between the lip and the gum.
"The product is a cult hit in the US, and popular in Sweden, and Swedish Match has a 90 per cent market share. It has grown its earnings by 18 per cent a year since 2008, showing good growth in a defensive area," the manager said, explaining his choice.
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The manager also likes more traditional investments; Dolby, for example, and Singaporean commodity trader Noble Group.
"Noble Group is the best investment of my career. I invested in 2003, and shares are now up 1,000 per cent," he said.
Thomson, who manages the Rathbone Global Growth Opportunities fund, joined the company ten years ago, having been raised in Bermuda. He took over the fund in 2003.
Performance of fund over 1-yr
Source: Financial Express Analytics
He attributes some of the fund's success to the flexibility Rathbone allows him.
"The fund is flexible and unconstrained. We are not restricted by a benchmark, I don't take any holdings in utilities, Japan or telecoms, as I can't find any good growth ideas worldwide. I have around 50 or 60 holdings, which allows me to keep concentrating on my best investment ideas," he said.
The manager avoids investing directly in emerging markets, preferring instead to get exposure via established companies.
"I don't think it's a level playing field for western investors looking to invest in, say, Shanghai," he said.
Fundamentally, the manager looks for easy to understand companies, with accelerating and sustainable growth.
"The temptation is to go for exciting, headline stories, which have groundbreaking technology and new ideas, but new ideas first have to usurp old, tried and tested ideas. That takes time. I prefer gentle innovation, for example offering a better service," he said.
Unusually for a Trustnet Alpha Manager, Thomson avoids what he calls vulnerable leaders.
"I tend not to buy industry leaders, as they can become complacent and institutionalised. And so I go for companies which are striving to work their way to the top. I avoid groups which are too reliant on events beyond their control; oil and gas, or gold equities, for example," the manager explained.
On fund management, he says that adaptability is the most important aspect of the job, which is why he was able to sniff out Swedish Match and Virbac.
Finally, the manager avoids banks. While his fund shows a 7.5 per cent weighting to financials, the manager gets his exposure via other holdings, for example a holding in an M&A advisory company.
Going forwards, his caution on financials looks set to stay.
"I recently sold off a holding in Visa because of a US political threat to the business, and I used to have a Greek bank in my portfolio, but sold it off two years ago," he said.