‘I’m holding the most British stocks I have in years’

Peter Ewins of BMO Global Smaller Companies tells Rachel Mortimer why he has been increasing his fund’s exposure to London-listed shares

Founded in 1889 and one of Britain’s oldest investment trusts, BMO Global Smaller Companies focuses on backing small firms listed on stock markets around the world.

Its manager, Peter Ewins, is bullish about the prospects for these stocks: he believes that they will be lifted by the recovery in the global economy from the damage caused by the pandemic.

He says so with a wealth of experience under his belt. Mr Ewins has been involved with the £946m trust, which features on the Telegraph 25 list of our favourite funds, since 1996. He became its lead manager in 2005.

WHAT DO YOU INVEST IN? As it says on the tin, it’s a global small companies fund. We invest in smaller companies in different stock markets around the world.

HOW DO YOU PICK STOCKS? Ultimately we are looking for attractive growth over the medium term. To find this we analyse the quality of companies’ market positioning, their management and their cash flow performance.

In some markets, such as Japan, Asia and emerging markets, we buy funds run by other managers rather than individual stocks. Historically we haven’t had as many resources to analyse smaller companies from those regions.

WHAT ARE THE BIGGEST OPPORTUNITIES RIGHT NOW? We think America’s economy is likely to recover strongly and companies that rely on it for their revenues will enjoy a good year of performance. A number of companies in the fund do a lot of their business in America and we have been adding to those positions.

Globally, we like cyclical companies that are more affected by the performance of the economy and we are seeing some good signs of a strong pickup in industrial orders. telegraph.co.uk/ markets-hub

HAVE YOU BEEN BUYING MORE BRITISH SHARES? Yes. The UK has been beset by political challenges in the past couple of years but that is now behind us. We think some valuations on the London stock market are now cheap relative to other markets.

Obviously you have to analyse the individual companies, but there are certainly some stocks we felt were underrated relative to international peers.

Our weighting to British shares is now as high as it has been for some years at more than 28pc.

That’s not all a bet on the British economy, however, as a lot of Londonlisted companies derive a large portion of their revenues from overseas.

IS THE UK HOSPITALITY SECTOR DUE A RESURGENCE? We have bought a few companies that operate in the British hospitality sector over the past few months and they have done well.

The shares have recovered significantly, but the question now is whether there is much further to go. I suspect that in some cases much of the likely recovery in their business is already priced into the shares.

Some of the shares are approaching the levels at which they stood before the pandemic struck.

WHAT HAS BEEN YOUR BEST INVESTMENT? We invested in a Swedish company called MIPS, which is a global leader in helmet safety technology. So if you have a high- end bike or ski helmet quite often it will now be their technology protecting your head in the event of a crash.

Since we bought into the company its shares have done very well and the firm has good potential to grow into other areas, such as construction.

AND YOUR WORST? It ’s an occupational hazard that companies do go wrong and there are a few ingrained in my memory. One was Inter Link Foods, which was an acquisition vehicle that bought cake businesses.

It performed well for a while and then unfortunately it had management control issues as it grew and we ended up having to sell at a loss.

It was a painful reminder of the risks that are sometimes posed by acquisitive companies, particularly those with small management teams that are conducting a number of deals at once.

WHAT WOULD YOU BE IF NOT A FUND MANAGER? I do wonder sometimes whether I would have enjoyed teaching instead. I have patience, which you certainly need with investing too.

DO YOU HAVE YOUR OWN MONEY IN THE FUND? Yes, I am invested in the fund and so are my wife and children.