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Manraj Sekhon, manager of the £49.9m Henderson International fund, believes the secret to running money is being able to keep your nerve when trading screens are going haywire – just like they have been during recent months.

“Markets are challenging for us, but we are hanging on in there,” he says. “I thought 2008 might be a time when we would truly have to earn our money, and this is proving to be the case.”

The aim of the fund, launched at the beginning of October 1974, is to provide capital growth by investing in companies in any economic sector or area of the world.

“We try to focus on researching individual companies and identifying those we believe will do well,” he explains. “Although we see ourselves as growth investors, we only pay a reasonable price for that growth.”

Establishing where companies with such attributes can be found is therefore crucial.

“It is important to find companies that are enjoying a period of growth because of new products, markets or competitive advantages,” he adds. “You need to recognise where the growth is in terms of both industries and sectors.”

To stand a chance of catching his eye, a company must demonstrate an earnings potential greater than the market and an ability to sustain that level of growth. What is more, this potential must not yet be reflected in analysts’ expectations.

“Conservatively, we would expect to see at least 15-20 per cent upside in a stock on an absolute basis before it entered the portfolio,” he says. “When it reaches what we consider to be fair value, we will then review the holding.”

The portfolio, which is benchmarked against the MSCI World index, consists of approximately 90 large-cap holdings split between North America and the rest of the world. Country and sector weightings are governed by a bottom-up approach.

However, one of the problems right now is that the market is still working out who is likely to suffer most in the current environment. As a result, some companies could end up disappointing because earnings expectations are still too high.

“We are probably at the stage where the market is recalibrating earnings expectations,” he explains. “Given those uncertainties, we have shifted the portfolio to focus more on defensive earnings growth.”

This means companies in the consumer staples area are in vogue, along with selected healthcare, energy services and infrastructure names. Others, such as Nintendo, prosper in spite of the environment due to strong demand for individual products.

One favoured stock is Keppel Corporation, a Singapore-based oil services company that is very much a play on the infrastructure theme.

“It has got one of the largest market shares in the world, and right now its order books are at a record high,” explains Mr Sekhon. “Being a best-in-class operator means the stability of the revenue line and earnings growth visibility can be forecast for quite a few years.”

The fund has also increased its exposure to North America.

“Individual stock names became more interesting, so we accumulated some positions,” he adds. “The US has surprised people by how resilient it has been.”

Another consistent theme for the last couple of years has been having a meaningful underweight in Western banks. This stance meant the fund was negative on financials long before the credit crunch destroyed valuations at the back end of last year.

“These were companies operating in a very competitive, mature market, and you really could not see how they were going to sustain their growth,” he recalls. “We chose to avoid that area, and that decision saved us a huge amount of money.”

The fund’s annualised turnover is running at between 60-70 per cent. “When reviewing a stock that has reached fair value, we will look to see if the investment case has moved on,” he says. “If something has changed or the business plan has shifted, then we accept it and move on to something else.”

Xstrata, for example, has recently been sold. “We felt a lot of good news was already priced into the commodity stocks and thought it was prudent to reduce our exposure,” he explains. “We still have holdings in both Rio Tinto and Anglo American.”

Looking ahead, Mr Sekhon admits to being concerned. “The next few months are going to be very interesting,” he says. “To be frank, if we had been doing this interview any time during the past 18 months, I might have had much greater conviction about the outlook, but it is a little unclear right now.”

The combination of uncertain growth prospects for Western markets and general inflation concerns, he suggests, are causing real policy dilemmas. “The growth we are seeing remains fairly polarised,” he says. “There are parts of the economy that continue to do very well and others that are doing very poorly.”

However, he is more upbeat about the emerging areas. “As long as the Asian and emerging market economies can get through this inflationary situation, they will ultimately be in good shape because domestic demand is strong,” he says. “A lot of the bad news is already priced in, so we will be looking for opportunities.”

The immediate goal is getting through the next few months. As long as the financial crisis gripping the banks does not deteriorate, he says, stability could return to the market and create a platform for a more constructive recovery.

“The challenge for us is to stay ahead of the market by finding new areas of growth and avoid areas where concerns could develop,” he says. “That is what we need to do and hopefully that will translate into performance.”