Money: Buy cheap, and get excited

My favourite investment: each month City experts give their top tips

Andrew Spencer is head of the European group at Save & Prosper, part of Flemings. He personally looks after pounds 1.2bn of investments in a number of funds including S&P Growth & Income and S&P Premier Equity Growth. He has been with the group for 12 years.

"I know it doesn't sound good coming from a fund manager," says Andrew Spencer, "but I have found that my best investment decisions have been determined by chance and fate more than by positive selection."

Like many people who work in fund management, part of his personal wealth is tied up in the shares of his employer, Robert Fleming. He has various savings and option schemes as well as some direct share holdings.

But, he says: "Just as I have found that doctors don't look after their own health care and accountants don't look after their own money, fund managers are not that good at doing their share investment. Maybe it's due to my northern upbringing, but I believe in owning property and not being in debt."

This may be about to change. He plans to sell a London flat, which will free up pounds 30,000. "I will be buying shares in the small company arena," he says.

He believes the small companies sector is an inefficient market, so he uses the investment principles that give his successful funds such steady gains. This means looking for stock that is cheaper than its competitors and financially healthy. "It's looking for shares that you think are a bit of a steal," he says. "You want ones that you expect to deliver lots of good news and that you feel excited about."

Just over a year ago, this approach led him to invest in Somerfield, the supermarket group, where he has doubled his money on his original purchase. At the beginning of this year, he invested in Lonrho Mining. "I don't think we are heading for a deep economic recession, so it looked cheap, had a positive earnings trend and is a company many investors dislike." Lonrho has stood him in good stead, up some 40 per cent since he first made his investment.

Another company he likes is RM Group, which is involved in educational technology supplied over the internet. "If you feel that the Government's commitment to educationis right, then despite its rise in share price to date, I expect it to continue to do very well."

WHO'S WHO: ANDREW SPENCER

n Aged 34.

n Studied economics at Nottingham.

n Went into investment management with Save & Prosper - "the only job where I could not see myself suffering terminal boredom."

n Began work in as an analyst with S&P Commodity Shares. Promoted to fund manager, he worked in the area until 1992 when he moved into the UK retail team.

n Since last October he has been head of 35-strong European Group at S&P, responsible for pounds 16bn of investments.