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James Thomson, the manager of the £75.7m Rathbone Global Opportunities fund, insists he is happy to bide his time rather than panic buying stocks that are not ideally suited to his investment style.

“My cash level is the highest it has ever been at roughly 20 per cent,” he says. “I make investments when I have high conviction, and that is not the case because the economy is deteriorating very rapidly.”

Not even the rally earlier this year could force his hand. “I didn’t get a sense the environment was improving from talking to companies,” he explains. “I am watching a lot of names, but am happy to wait for the right moment.”

The aim of the fund, which was launched in May 2001, is to provide above-average long-term capital growth from a global portfolio. It takes an aggressive stance with between 50 and 60 holdings, and has an annual turnover of around 30 per cent.

“I invest in undiscovered growth companies under the radar and not in blue-chip, household names,” he says. “I consider it my job to unearth interesting stories of which people weren’t previously aware.”

This list does not include turnaround companies or recovery stories. Instead, he is constantly on the look out for something a bit different, a competitive edge such as a better product, service or business model.

“I buy unblemished growth companies that are easy to understand,” he explains. “The managements have to be entrepreneurial, visionary and aggressive, while the demand for the product or service needs to be underestimated or misunderstood.”

A good example of his approach is Wellstream, which makes flexible pipes for the oil and gas industry. “There is a significant amount of investment in discovering and developing offshore oil fields,” he explains. “This company is doing extremely well, has good visibility and a reasonable valuation in an industry that’s growing rapidly.”

Although UK-listed, it is very much an international player. “These businesses are increasingly global,” he says. “This makes a strong case for global funds as you can cherrypick the best ideas wherever they are in the world.”

Mr Thomson, who has been in charge of day-to-day management since November 2003 and took over sole responsibility from Julian Chillingworth in July 2005, has the freedom to move away from the benchmark FTSE World (GDP) index.

“I have nothing in Japan and nothing in telecoms companies, pharmaceuticals, utilities, property or housebuilders,” he says. “In addition, I have not got any exposure to US, UK or Asian banks, so it is pretty punchy.”

A network of 40 trusted analysts around the globe constantly feed him ideas and he personally meets with more than 200 companies every year. “I want to understand the drivers of their businesses and the vulnerabilities,” he explains.

Currently, he is avoiding areas where the fundamentals are deteriorating due to excess capacity and pricing pressure. As a result, he has been unable to find any good ideas within retail, financials, technology or healthcare.

Instead, he is focusing the fund on sectors such as oil and gas and basic materials. It is a long-running theme, accounting for more than 30 per cent of the fund, that he describes as “the picks and shovels” approach.

“It is where I am buying companies that provide services and equipment to the oil companies, mining industry and farmers,” he explains. “These are the areas that are experiencing pricing power and increased capital spending.”

As returns improve for these commodity-driven industries, the level of spending will also increase. “They also have multiple years of visibility,” he adds. “An oil services company knows what its book of business looks like for the next three to five years. That gives me a greater level of comfort that fundamentals are strong.”

However, along with the vast majority of funds in the IMA Global Growth sector, Mr Thomson’s fund has slipped into negative territory over the past year. It is a situation he blames on holdings outside his favoured sectors.

“I have had some exposure to the aerospace sector, which has deteriorated because investors assume aircraft orders will be cancelled as a result of the weakening economy and high oil prices,” he says. “That has been a difficult area for me.”

Looking ahead, he does not expect life to get any easier in the short term.

“It will be a pretty tough year but I am going to focus on the companies and fundamentals that are still improving,” he says. “You can find pockets of excitement so I am still smiling as I cross the minefield.”