How does the fund invest? 

First, we look for companies with strong intellectual property. Then they must demonstrate high returns on invested capital, which demonstrates how effectively they invest and grow their business. Finally, we look at valuation as we want to buy shares that are trading more cheaply than their rivals.  

We like it when the managers and directors of a company are also invested in the shares, so we want the company’s top brass to own at least 3pc of the stock.

These criteria usually lead us to the industrial, consumer goods and software sectors, and steer us away from banks, housebuilders and construction. 

Why do you invest in riskier small companies? 

I have a lot of experience investing in small companies, as that is where I started my career as a fund manager in 1993. 

There is an energy and excitement in small companies that is hard to find elsewhere. These stocks usually operate in rapidly expanding industries, mostly in technology. When we find small, exciting businesses that have strong management ownership behind them, they often grow nicely and add to the performance of the fund. 

Sometimes investors consider small companies to be more risky, and if their valuation is high their share prices can move downwards fast if the market mood changes. That’s why we only have between 20pc and 30pc of our money invested in such stocks. 

What has been the impact of the war in Ukraine on the fund?

It is hard to figure out what is driving markets at the moment, with worries over inflation and higher interest rates as well as the war in Ukraine. 

But there are some sectors that are doing relatively well. Oil has been one key outperformer, which has benefited our holdings in BP and Shell. 

We don’t invest in mining firms, which have risen sharply because of supply constraints arising from the war. That has been a drag on our performance versus the market so far this year.