Nick Train, who runs the £1.2bn Finsbury Growth and Income Trust, is buying consumer goods companies listed in developed markets as a way to profit from economic growth in the emerging world.
Mr Train’s largest investment is Unilever, and he also has substantial stakes in drinks companies Diageo, Heineken, and confectionary company Mondalez.
Mr Train, who also manages the £4.5bn Lindsell Train UK Equity fun, said all of those companies have significant revenue generated from emerging markets.
Many of those companies are regarded by investors as “bond proxies” and so are likely to underperform as interest rates and bond yields rise.
This is due to the regular income generated by those stocks, and the growth in dividends, being similar in terms of reliability to that which is earned from a bond.
Shares in large consumer companies have been out of favour as the market expects bond yields to rise.
Stephen Snowden, the Irishman who jointly runs the £1.1bn Kames Investment Grade bond fund, said he believes developed markets are shaping up to be like Japan has been for 30 years, with low growth and low inflation, meaning bond yields stay lower for longer.
That would boost the investment case for the equities that perform most like bonds, he added.
Mr Train said he finds the 3 per cent yield offered by Unilever "reassuring" but added it is not the reason he owns the stock, as he does not believe the future movement of share prices can accurately be priced by examining the dividend yield.
The MSCI Emerging Market index is up 32 per cent year to date.
Mr Train said Unilever generates 58 per cent of its revenue from emerging markets.
He noted that in its third quarter results update, published in October, growth in its emerging markets businesses was 6 per cent, while its revenues shrank in developed markets.
He said: "Without getting starry-eyed about it – because the last few years have proven again how volatile emerging economies can be – we're sure that these exposures will be at least a mitigating factor for the companies as consumer brands work out how to readjust to the 21st century.”
Around 10 per cent of the capital in the Finsbury Growth and Income Trust is deployed to Unilever shares.
Mr Train said Heineken and Diageo also derive significant revenue from within emerging markets, and so can grow even if developed markets offer limited growth.
The Finsbury Growth and Income trust has returned 52 per cent over the past three years until 21 November, compared with 23 per cent for the average trust in the AIC UK Equity income sector in the same time period.