FUND management is known to be a sector dominated by men and of the 20 managers listed in The Herald’s latest league table just two are women: Baillie Gifford’s Sarah Whitley and Kames Capital’s Elaine Morgan.

Ms Whitley is due to retire next month, potentially leaving Ms Morgan, who manages Kames’ UK Smaller Companies Fund, as the only woman on future lists.

Having been with Kames since leaving university in 1988, Ms Morgan has managed the smaller companies fund since it launched in 2006.

She has made it into The Herald’s league table of the top Scottish fund managers after ranking in the top quartile of financial information group Citywire’s listing of over 4,600 global managers.

The table, which is based on risk-adjusted performance over the three years to the end of January, was topped by AAA-rated Amati Global Investors managers Paul Jourdan, David Stevenson and Douglas Lawson.

According to Ms Morgan, part of the reason for her fund making it into the table is that smaller companies had “an exceptional year last year”.

While that helped the fund generate a return of 44 per cent over the three-year period, Ms Morgan said she is more driven by individual stock selection than by thinking about how the small-cap universe as a whole might perform.

“In terms of the nature of the companies we invest in, we tend to look at those that are cash generative and profitable,” she said.

“We don’t do a lot of early-stage investment in concept stocks or technology that hasn’t come to market yet.

“We look for proven business models.”

As a result, the fund has a bias towards the larger end of the small-cap spectrum, with 52 per cent of its assets invested in mid-cap names, 17 per cent in the FTSE Small Cap Index and 24 per cent in the Alternative Investment Market.

The investment strategy has also led the fund to shy away from domestic cyclical businesses - the type that rely on consumers making discretionary spends in a booming economy - over the three years.

Instead, Ms Morgan said she has focused more on “companies that have benefited from growth through product innovation or technological innovation or a change in the regulatory environment”.

One business that falls into the first category is Dechra Pharmaceuticals, a veterinary medicine business that is currently the largest holding in the portfolio.

“They have generated growth through geographical expansion, through bringing new products to market and through acquisitions, most notably of Putney and AST-Le Vet,” Ms Morgan said.

“It’s in the field of veterinary pharmaceuticals so can innovate drugs with a lower risk profile than in the human pharma sphere.”

Alternative-fund administration business Sanne Group, which is also one of the UK Smaller Companies Fund’s largest holdings, fits into Ms Morgan’s regulatory-change category.

“There’s been growth in funds under management in private equity, real estate and absolute return hedge funds and they do the administration around those,” she said.

“There has been a regulatory drive in those markets towards outsourcing and Sanne are beneficiaries of that.”

Professional services business FDM, meanwhile, is an example of a company Ms Morgan favours because it is benefitting from advances in technology by placing specialist IT advisers in clients’ businesses around the world.

In total, Ms Morgan can hold between 60 and 90 stocks in her fund, with the number currently sitting at 86.

While this is higher than would normally be the case, Ms Morgan said there has been no change in the proportion her larger holdings account for, with the top 10 positions always making up around 30 per cent of the total fund.