Firms looking overseas 'to do better'

Small and medium-sized British companies, especially those with exposure to emerging markets, such as conveyor belt maker Fenner, are in much better shape than a sluggish UK economy, said a fund manager at Hermes.

Those with a strong overseas presence will outperform small and mid-cap firms focused more on the domestic economy, which is set to suffer from austerity measures, said John Leahy, lead manager of Hermes UK Small & Mid Cap fund.

"UK small and mid caps are in a much healthier position than the UK economy at the moment," the fund manager said.

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He said it was possible to construct a portfolio that was not too reliant on the UK economy, which he expects to show low growth.

Hull-based Fenner, now in the FTSE 250, is one of his top 10 holdings.

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