‘The market will bounce back by the end of the year’

Investors have been hit hard by the coronavirus outbreak. Markets have dropped and the fate of many companies is in doubt as the economically damaging global shutdown continues. For fund managers it has been both a blessing and a curse. It has offered up cheap shares, but their much-prized performance track records have been wiped away in days.

Margaret Lawson, who runs the £150m SVM UK Growth fund, has not come out of it unscathed. Her portfolio has fallen by 39pc since Feb 21 and is one of the worst affected by the outbreak.

Yet she remains confident that the stocks she owns will recover over the long term.

She tells Telegraph Money why she will back airlines and how she is using the time to buy extremely cheap stocks that should recover by 2021.

WHAT MAKES YOU DIFFERENT?

We try to look at the managers of businesses and the opportunity within a market, which is basically the same as everybody else.

However, I do about 200 meetings with businesses a year and have 40 years of experience, which gives me an edge. I monitor companies and, when something has changed, my ability to reassess quickly is my advantage.

WHO IS THE FUND FOR?

It is for investors in their 20s all the way up to their 50s. This fund is to add spice to your portfolio and sit alongside your more stable funds. It owns a lot of growth stocks, which can be volatile.

HOW DO YOU JUDGE WHICH STOCKS TO PICK?

We look for companies that turn sales into cash. That is it. We don’t bother with the price-to-earnings (p/e) ratio [a common measure of value] because it is short-term thinking. As these companies deliver, the opportunity for investors gets better. A high p/e does not put me off.

SVM UK Growth’s Margaret Lawson tells Jonathan Jones how she has been investing during the recent sell-off

HOW HAVE THE RECENT MARKET FALLS AFFECTED YOU?

What has been different is the severity of the crash and how quickly the market went from its high point to its low point. We haven’t seen it like this since something like 1896. It has taken everybody by surprise. But by the end of the year we will start to see a recovery, so you have to start thinking about that now.

YOU OWN AIRLINES. WHY?

There will be government support, because without transport our economy can’t recover. The airlines are certain to be bailed out, so I don’t think now is the time to be selling them. The weak ones will still fail, but, although it will take time, people will go back to holidays.

You must back the strongest firms that have fallen too far, such as the holiday company Jet2. The share price of its parent company, Dart Group, has fallen from £18 to 400p. Budget airline Wizz Air is another: its shares are down to £21 from £44. If these companies can survive, they will come back so much stronger. I also own WH Smith, which relies on airport stores. Its shares are down from £25 to 500p. The pain is not over, but this is not the time to sell these stocks.

WHAT HAS BEEN YOUR BEST INVESTMENT?

The best is Unite Group, a student accommodation company. I have owned it since 2008 and, as universities have struggled to build housing that students want to live in, its market has grown. I started buying it at 350p and two weeks ago it was up at £12.90. It has fallen to 700p now, but that’s still double what I paid.

AND YOUR WORST?

We don’t have egos here. Women on the whole don’t have egos. A lot of managers try to hide bad performance or mistakes, but we are all fallible.

£1,000 invested at launch would be worth £2,450 today