Analyst: JPMorgan

The performance chart for the JPM Natural Resources fund could be mistaken for the face of a craggy cliff, rising up proudly from the ground in its march toward the sky. That is until the first quarter of last year, when the line drops away from the precipice to illustrate its biggest fall since inception.

The fund's manager for the past 16 years, Ian Henderson, admits an overexposure to smaller companies, in hindsight, “was not the place to be” when the icy tentacles of the credit crisis spread throughout global markets, and his confidence in the emerging-market decoupling theory was proven misplaced as the contagion spread during 2008.

But funds cannot be managed retrospectively, and Mr Henderson employs the first of many analogies to put his decisions into perspective.

“One may make some comment about a lack of perspicacity," he says. "It’s certainly true I don’t know anybody in 2007 who predicted the decline of Lehman Brothers. Quite often, if you’re on the battlefield, you don’t imagine you’ll be struck by a bazooka – you wouldn’t be there if you thought that would happen.”

Changing tack, he adds: “When you are hit by a meteor from outer space, you can’t help but be affected, and we were. That resulted in the resources sector as a whole coming under considerable pressure.”

While Mr Henderson and co-manager Stuart Connell had started moving up the cap scale at the end of 2007 – investing in companies with a market cap of $2bn (£1.2bn) or greater, double the prerequisite previously held – it was too little, too late.

However, as a consequence of more stringent stress-testing on the £960.9m fund, it was not one of the many forced sellers that swamped the market.

Mr Henderson says: “We carefully stress-tested our funds against scenarios of substantial liquidations on a single day and made sure that if Armageddon happened, we could meet redemptions under almost any conceivable circumstance.”

This was necessary, he says, because, with almost $7bn in assets under management in the smaller companies space, there were concerns “we were the elephant in the room” during adverse market conditions.

In fact, the fund experienced positive inflows last year in spite of a sharp sell-off of gold, mining and energy stocks and wider market volatility. As new-year optimism has flourished, the HSBC Gold, Mining and Energy index (total return) has bounced and, though lagging, so has the performance of the JPM Natural Resources fund.

But do not let Mr Henderson catch you calling the index his benchmark – even though that is the label given on the fund factsheet.

“Please, please don’t think I ever operate under a benchmark,” he says. “It’s there as a comparison only. It is not followed in any way. The components are of no relevance to me as the investment manager. All I’m trying to do is make clients money.”