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Fed up with red tape and health & safety? Profit from it!
Fund manager James Thomson is seeking to capitalise of Britain's bureaucratic leanings.
Red tape, dictates from Brussels, and overwrought health and safety rules are the bane of many Brits, but investor James Thomson is embracing the tangle of regulations with an investment in testing company Intertek (ITRK.L).
‘Intertek is a play on a theme I call “red tape”,’ he said, explaining the top 10 holding he has in Intertek in the Rathbone Global Opportunities Fund he manages. ‘Health and safety, regulation, certifications, inspection: they ensure we meet all of the rigorous requirements we have these days.’
Thompson, a Citywire A-rated fund manager, explained further in a webcast: ‘This is an industry and company which will benefit from increasing regulation, increasing red tape and the ever increasing number of directives coming from our friends in the European Union.’ So far this year, shares in Intertek have risen by 28%, continuing their strong run of the past few years.
Thomson, whose fund is invested in medium-sized and large companies, explains that he tries to avoid mainstream companies, seeking ‘under the radar’ operations to invest in. But he has come up short in his recent efforts, choosing to keep 18% of the fund in cash as waits for ‘higher conviction ideas to come through’.
The health and safety industry is not the only unusual source of investments for Thomson; he cites economically resilient pet companies – from retail pet stores to companies producing pharmaceutical products for animals – as well as a funeral home and crematorium business among his holdings.
Conversely, Thomson is avoiding some huge sectors, including miners, autos, utilities, pharmaceuticals, telecoms companies and banks.
While he sees banks as 'too opaque', the fund manager has alternative exposure to financials, with Visa the second biggest holding in the fund, just behind property website Rightmove.
But Thomson’s underweight exposure to the rallying banking sector, as well as his high cash holding, cost him recently. ‘This year my performance has been satisfactory, but not really spectacular,’ he admits.
The Rathbone Global Opportunities Fund has returned 40% over three years, beating the benchmark return of 31.2%
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