SVM UK Emerging Fund, which has investments of £4.9m ($9.8m), is so small it barely registers on the Richter scale of investment trusts. However, despite its size there are enough investors keen to invest in it that the shares stand at par to the value of the underlying assets. What is more, this compares with a sector average discount of close to 10 per cent.

The shares in SVM UK Emerging Fund have risen 38 per cent in the year, about 176 per cent over three years.

That compares with a rise of 23 per cent in the value of its assets over a year and 100 per cent rise in assets over three years.

But the fund took a bit of a knock in the fourth quarter of 2007. Asset values fell by 2 per cent in the past quarter and the value of the shares also fell.

That is still better than the benchmark small cap, which fell 13 per cent and Aim index which fell 6 per cent. But Donald Robertson, the manager, is not consoled.

He says: “We don’t look at benchmarks. I don’t care [about the relative performance] or what the opposition does. We are here to make money”.

Mr Robertson, aged 47, is a qualified accountant who has spent more than 20 years managing money.

He was a co-founder of Scottish Value Managment (SVM) with Colin Mclean and Margaret Lawson when the Edinburgh-based boutique fund manager was formed in 1990. Mr Mclean is deputy manager of the UK Emerging fund.

Mr Robertson is SVM’s finance director. He also lists among his other responsibilities the management of a number of bigger investment trusts, derivatives/structured products and speciality finance for SVM.

And he is co-manager of a global fund of funds where the onus is on picking other talented stock pickers.

Mr Robertson is unabashed about trawling through the portfolios of funds in this global fund and picking the brains of the managers for good ideas on stocks.

“We see managers from all over the world and always ask what they have in their portfolios.”

Before joining SVM Mr Robertson worked at Ivory & Sime (also in Scotland), starting in 1982 as a junior member of the administration staff and moving on to investing in venture capital and managing a couple of funds.

He took over managing the SVM UK Emerging fund in 2005. By then the fund was five years old, having originally been set up to invest in Ofex companies.

In 2004 the remit was changed as Ofex, the market in unquoted and unlisted companies with market capitalisations of less than £10m (now called Plus) fell out of favour.

Mr Robertson spent the first nine months of 2006 shifting the fund’s portfolio away from Ofex stocks and into stocks on Aim. Now 85 per cent of investments are Aim companies, 6 per cent is in Ofex companies and the rest is in venture capital.

“The balance is about right now,” says Mr Robertson.

Even so, he says his work is cut out for him. “Aim is not exactly an easy market. It is a bit of a minefield. Half the battle is avoiding the poor companies.”

Mr Robertson has a portfolio of about 40 stocks. Compared with rival special situation funds that scatter their investments across as much as 200 companies, his is a tight portfolio. Mr Robertson will also take big stakes in groups.

Most of his holdings are worth more than 1 per cent of the trust’s assets, and on average each investment is worth about 2 or 3 per cent of assets. The only restriction is that no stock should represent more than 5 per cent of assets.

The goal is to find a company where there is a catalyst for change to crystallise or realise hidden value. That may be some kind of corporate action, a merger or an acquisition.

The latest example is Ultracell Medical Technologies, which agreed a cash bid by Aspen Surgical last month. Mr Robertson’s fund held 3 per cent of the company. “The good news was that the share price rose 25 per cent in a quarter and a 50 per cent premium to the price we paid. The bad news is that the price was not brilliant.”

“We bought it on the basis that it would be three or four times the current value in three years time.”

Much of the rest of the trust is in basic materials and oil and gas companies.

One of his biggest holdings is in Kirkland Lake Gold, the Canadian company that operates five gold mines in Ontario but trades on Aim. Another favourite is Petrel Resources, the £80m Aim-listed oil company.

Last month, Petrel’s shares jumped 31.5 per cent to 119p on the day it said it was moving towards the start of negotiations over an exploration contract in the south of Iraq.

The fund’s holding are an eclectic mix ranging from companies involved in gambling, media, mining, music copyright to biohazard waste management.

One of Mr Robertson’s bigger bets is on China Pub Company, operating pubs in China but listed on Aim.

There are few sectors Mr Robertson will not invest in, although he says he is biased against telecommunications, financials and healthcare with the exception of Ultracell.

Mr Robertson also avoids buying shares at initial public offers when companies “float in a blaze of glory. In fact, we see more value in companies that have been around for a while and have delayed realising the value.”

He reckons there are a couple of tricks to successful investment – and is happy to pass them on. The first is to try to identify not what a company is worth now but how much it could be worth a couple of years down the road.

“We do not look at whether a company is worth £10m now. What is important is if it is likely to be worth £50m in a few years.”

And the other trick is sometimes to sell even if you think the shares have further to rise: “Half the battle is not to overstay your welcome.”