Reasons to be cheerful

"We all know that, since 2009, equity prices have recovered. But they are still off their highs so there is some recovery to go," he says, adding that there has been a recovery in some other important measures, including merger and acquisition (M&A) activity.

"Deals are one of the best indicators of animal spirits," he says. "Yes, there are macroeconomic concerns in today's world and it remains tricky for certain bonds and currencies. But the corporate sector continues to pursue its strategic objectives, taking advantage of market falls."

He points out that globally, M&A increased by 5 per cent in 2011 compared with 2010, both in terms of number of deals (27,752) and the value of deals ($2.3 trillion). In the first two weeks of 2012 M&A deals amounted to $46.5bn.

"The point is that deals are continuing and that is bullish," he continues. "It suggests the stock market cycle is pointing up rather than down." And these comments were made before the announcement of Facebook's initial offering and the $80bn Glencore-Xstrata combination.

Beyond these positive omens, Mr Train himself has reason to be cheerful: over the past 10 years Finsbury Growth and Income has made an annualised return of more than double the FTSE All-Share , averaging 6.6 per cent against 3.1 per cent.

He is also confident in the power of brands, having recently taken a holding in Netherlands drinks company Heineken. "It is clear that brands remain valuable, especially global ones, and even more so if they offer entry into emerging markets."

Mr Train cites the growing revenues of luxury goods companies such as France's LVMH and adds: "Selling 'bling' will continue to drive revenue and profit for two decades ore more, because of emerging markets exposure. Investors are still underestimating the emerging markets opportunity."

Finsbury Growth and Income gets its exposure to the emerging market story via companies such as Heineken, LVMH and UK-listed Burberry, which makes up around 3 per cent of the trust's assets. It also holds household goods company Unilever, another titan with major emerging-market exposure. At the end of December, Unilever was the second largest holding at more than 10 per cent of assets.

"In the Netherlands and the UK, the average spend per person each year on Unilever products is €44 (£36.58)," says Mr Train. "But in Indonesia, where around 90 per cent of the population buys at least one Unilever product a year, the spend is only €7 per capita a year. In India, the average spend on Hindustan Lever (Unilever's name in India) is €2 per capita. The emerging markets story is an immature opportunity with a multi-year, multi-decade growth rate."

He continues: "History shows us that investing in strong consumer brands makes sense most of the time and we think that this will be even more appropriate going forward. If you want to make a serious strategic allocation, consumer brands are a good place to invest as they attract loyalty from consumers."

These do not necessarily have to be blue-chip companies. "We own some smaller companies such as AG Barr (the fund's third largest holding at around 8 per cent of assets)," he adds. "The company owns Irn-Bru and Rubicon, which we think are fantastic brands. If you look at the long-term performance of AG Barr anyone would have been thrilled to own it - it's churning out cash."

The right focus

Mr Train's mantra is to focus on the right things. "The single most important event in the second half of 2011 had nothing whatsoever to do with the euro, at least so far as long-term equity investors were concerned," he says. "Rather it was the launch of a tablet device, the Kindle Fire," which Mr Train describes as "an iPad-wannabe".

"The internet is becoming ever more deeply embedded in our day-to-day lives and it will lead to enormous propagation of news read, shopping and banking, among other things. What drives long-term equity value is when companies enjoy access to opportunities for secular profit growth and productivity gains, most often delivered by technology change."

Read more about Facebook and the social media boom

Finsbury Growth and Income has invested in companies that are likely to participate in the growth of tablet devices. "Tablet-friendly companies such as broker Hargreaves Lansdown and education book publisher Pearson (owner of the Financial Times and Investors Chronicle) will be at the vanguard of the bull market," says Mr Train.

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Despite being at odds with some investors at present, Mr Train insists he is not a contrarian. "Contrarians find the most unloved shares and after investing for a few years, move on when they perk up. But we are looking for things we can own for the next 10 or 20 years, so we have an incredibly low turnover. We are more strategic."

Shareholders will quite reasonably ask what impact such macroeconomic worries have on his investment strategy. Mr Train's answer is: very little. "We pay little attention to macroeconomics because it has minimal long-term impact on the value of equity assets. Over time, stock markets have delivered handsome real returns. Over the year to November 2011, 18 out of 25 of our holdings reported increased earnings and dividends. Nation states may be having a tough time but corporate owners can still create value for share holders."

Read more about how Nick Train selects his shares