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First State Investments is one of the few fund managers to have defied the gravity of the liquidity crisis. While the UK retail market posted the worst sales figures since the early 1990s for the first quarter, First State reported net inflows of £136m. According to the data provider Lipper Feri, this made it the sector’s seventh best-selling fund manager – despite being ranked 35th in terms of total funds under management.

But this is no surprise when you consider the Australian company’s two main areas of expertise: Pacific basin equity and commodities. Emerging markets were considered a "safe haven" in the early months of the credit crisis. Pure commodity plays took their place this year, as inflationary pressures mounted. First State has benefited from both trends.

“We’ve had favourable winds,” admits chief executive Charlie Metcalfe. “We’ve got to be mindful of the fact that all those things could change.”

First State’s sales figures have also been helped by its timely exit from the mature equity markets worst hit by redemptions. The last vestige of its UK equity range, the First State British Smaller Companies fund, was transferred to Noble Fund Managers last month.

“We’ve tried to differentiate ourselves in a very crowded market place by being very focused on the things we can be identified as good at,” says Mr Metcalfe.

He contrasts First State’s strategy with that of its owner, Colonial First State Global Asset Management, a subsidiary of the Commonwealth Bank of Australia and the nation’s largest manager of domestic funds. “Colonial First State offers everything to everyone. We’re not like that. We don’t try to compete with the one-stop shops.”

This is a recent development. Five years ago, First State offered a classic range of equity and balanced funds – the legacy of the Scottish boutique Stewart Ivory, which Colonial First State acquired in 2000.

But according to Mr Metcalfe, First State had limited pricing power or brand presence in the core asset classes, so the company decided to reinvent itself as a “specialist” fund manager, focused exclusively on two areas commonly associated with Australia.

The first is Pacific basin equity, and by extension emerging markets, which still account for nearly two-thirds of First State’s assets under management. At £1.7bn, the First State Asia Pacific Leaders fund is the largest in the IMA Asia Pacific ex Japan sector by some margin. It is also one of its best performers: its track record was top-decile over three months, one year and three years to 18 August, a consistency which has earned the team a triple-A rating from S&P.

The company has built on this winning franchise with various related vehicles: the £167m Greater China Growth fund, the £30m Indian Subcontinent fund, and – most intriguingly – the £59m Asia Pacific Sustainability fund, launched in December 2005. The Pacific rim is not usually associated with strong social or environmental controls. Yet Mr Metcalfe says the Sustainability fund, which uses a combination of green and ethical screening, is not radically different from its larger sisters in the sector.

Instead, he sees it as an example of the way First State can bring new products to market whileretaining its focus and niche positioning. “There’s no end the number of specialist funds you can derive from the core competences we have,” he insists.

The house’s second, more recent field of expertise covers the “alternative” asset classes: natural resources, property and, most recently, listed infrastructure. These now make up nearly 30 per cent of AUM, thanks in part to strong retail demand for the £535m First State Global Resources fund over the past year.

The root of these alternatives can be traced back to Australia. Since mining companies make up a significant share of the Australian stock exchange, Colonial First State’s native Sydney has long been a magnet for commodity investors. Less well known is Australia’s strength in listed property. “Australia has the most securitised property market in the world,” says Michael Stapleton, head of business development at First State. “We have a very well-developed strategy in Sydney with about £2.5bn under management, and we’re bringing it across to the UK.”

The same is true of infrastructure. First State opened its £66m Global Listed Infrastructure fund in October last year. Mr Stapleton happily admits it was a “neat time to launch a strategy that was defensive and inflation-hedged”. But the timing was less fortuitous on the property fund, which has faced extremely volatile markets across the globe. The UK Oeic holds only £6m, despite being launched nearly two years ago.

In the long run, however, First State anticipates strong growth in both property and infrastructure investing, as European markets securitise. “We have seen the trend evolve in Australia and we expect it to happen in Europe. We are getting positioned ahead of the curve,” explains Mr Stapleton.

Yet global equity is top of his list of “critical products” for the next five years. In what some might see as a deviation from its specialist niche, First State relaunched its global equity range two years ago, hiring a new manager, Habib Subjally, to head a new team. Although they currently manage only £1.3bn, Mr Metcalfe has high hopes for the future

“Global equity will represent a big part of our future,” he says, rejecting the suggestion that it is a “plain vanilla” strategy. “There’s scope for differentiation. Global funds are often built off a massive global platform, and the process is quite clunky. Our team only does global. We see it as a specialist product.”