Despite a gloomy economic outlook, there are some sectors that will weather the storm, according to a selection of fund managers.

Investment company fund managers are putting their faith in the energy, online retail, tobacco and infrastructure sectors to do well during the slowdown.

According to James Kinghorn, senior investment manager at the Scottish Investment Trust, energy and water as an investment trend are likely to last for some time: ‘We have a large position in the oil and gas industry, and this is split between oil and gas producers and the oil and gas equipment and services names. The equipment and services companies are benefiting from rising capital expenditure requirements of the producers. The producers need to drill more wells and are being forced to do so in more challenging locations as they attempt to maintain oil and gas production levels.

‘This trend is likely to last many years, as oil demand will continue to rise given emerging market growth, and given that oil supply is constrained by limited new finds and many years of underinvestment.’

And Kinghorn isn’t alone, as Andrew Whalley, manager of Premier Energy & Water, adds, ‘Because the energy and water sectors are, by their very nature, essential services, they tend to be less economically sensitive than most other industries. In addition to their defensive characteristics these sectors are seeing rising demand, notably in developing countries such as China, India, Thailand and Malaysia, and we believe that growth in these economies is likely to outstrip GDP for many years. In particular, demand for carbon-free energy will dominate new build, and so the renewable energy sector will continue to experience significant growth.’

In the retail sector, fund managers are looking towards those with a good online presence to perform particularly well during these times. Mark Urquhart, manager of Edinburgh Worldwide, says, ‘Compared to their high street counterparts, online retailers may prove more resilient to a slowdown in consumer spending, as they are often able to offer cheaper or discounted products due to having lower overheads; consumers are becoming ever more confident in the internet as a shopping tool and, by its very nature, online is international and not confined to the economic vagaries of one location.’

However, as Neil Hermon, manager of the Henderson Smaller Companies Investment Trust, points out, in times of economic uncertainty investors will be prepared to pay up for companies that display earnings resilience.

‘I believe that companies that build and provide services into the infrastructure market have this resilience. The government has made a commitment to areas such as education, transport and health that will require the investment of tens of billions of pounds. Additionally the Olympics will provide a short-term boost to demand. Businesses that provide services into these areas, such as equity participation, construction and maintenance, are poised to do well.’