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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.”

He rebuffs assertions that surely this is what fund managers are supposed to do – make clients money – stating “many people try to outperform benchmarks – that is not what fund managers should be doing”. Instead, he advocates an absolute return approach based on “making good investments on a long-term basis in businesses that are viable and vibrant”.

Consequently, it could be assumed Mr Henderson is disappointed by performance, as the fund has failed to make a positive return over one and three years, according to Morningstar. Three years to May 11, the fund lost 8.5 per cent, although three months to that date, it has returned a positive and impressive 36 per cent.

Mr Henderson’s investment approach is very people-centric. He says he looks for “good helmsmen” that head sustainable companies in sectors that macroeconomic analysis determines as beneficial.

To explain this process, another analogy is used.

“To ignore the fact tides, and sectors, go in and out is naive," he says. "Tide is important, but equally, you have to consider who is at the helm of the ship.

"You try and get a crew with a good helmsman, who is able to navigate in the right direction for the long term. When the tide is against you, you want to reflect that in your portfolio. In difficult circumstances, you should re-direct some assets to the area of ocean where the tide is with you rather than against you."

Mr Henderson analyses corporate management during numerous site visits and looks for consistency and honesty.

“When you meet people on a regular basis, and they do what they say they will, without exaggeration, and just deliver”, that is what he looks for. Once his trust has been earned, Mr Henderson says he will often stick with company managers “through thick and thin”. The low turnover of the fund – in 2003, it was zero, while this year it is 30 per cent – demonstrates this, and he says some stocks have remained in the fund for more than a decade.

Turnover is up this year because of the adjustments necessitated by market conditions. Gold exposure was increased in January, growing to 44.7 per cent at the end of February before being reduced by 6 per cent in April to allow for investment in what Mr Henderson describes as “economic de-sensitive producers” – exploration companies and 'up-stream' producers. These include large-cap companies, such as mining group Xstrata.

Interestingly, as a slew of agriculture funds are introduced to the retail market, this sub-sector accounts for only 2.4 per cent of the fund. Mr Henderson explains: “I don’t think there are more than 40 companies on a global basis in the agricultural space. Out of a universe of thousands, to put a portfolio into a tiny number of companies would be an extraordinary thing. They are tiny companies of very little consequence – one of the largest has a cap size of $16bn, whereas the energy sector goes into the trillions.”

The geographic allocation, which has a large weighting in Canada, Australia and the UK, is “coincidental” to the stock selection process, he says, adding: “We’re trying to find world-scale projects quite early on in their development and support them. We’ll give more money to develop a project. If we find a great helmsman, I will stick with him.”