Although the stock market has achieved new peaks, the portfolio's shortage of blue sky technology shares or even spivvy possible shells has blunted its overall display. Many of the big index stocks, those in the banking sector, are not best placed to exploit the opportunities of the Internet and e-commerce and it is our job as growth managers to anticipate those companies which will be in the index in five years."FUNDAMENTAL FACTSFund Manager: Rory PoweAge: 36Fund: INVESCO GT European GrowthSize of Fund: pounds 1.64bnFund Launched: August 1985Manager of Fund: Since May 1991Current Yield: 0.00%Initial Charge: 5.25%(Investors may be able to buy at lower cost via a discount broker)Annual Charge: 1.50%Current Bid/Offer Spread: 6.13%Minimum Investment: pounds 1,000 (subsequently pounds 100)Minimum Monthly Savings: pounds 50Standard & Poor's Micropal Rating (maximum KKKKK): KKKKFund performance (to 1 December 1999):One Year 27.57%Two Years 90.49%Three Years 127.01%Five Years 271.60%Seven Years 474.80%Ten Years 401.29%Source: Standard & Poor's Micropal. Performance in January was very strong, but from February to July the fund underperformed. The fund has remained underweight in deep cyclical companies whose fortunes depend upon world growth. Many such companies appear to be fully valued yet with little in the way of pricing power. We stuck to our guns and over the past three months growth stocks have bounced back with a vengeance." Which is why the fund continues to concentrate on less well-known companies."My job is to make money for the unitholders and I don't believe investing in the index is reducing the risk. Arguably, the index is higher risk, because it is made up of companies that have already arrived.

We are not necessarily looking for companies that are successful now, but ones which have the potential to become successful."He adds: "My job as fund manager is to identify stocks that will be come part of the index. I will take a risk on investing on smaller companies only because I believe they will one day dominate their markets and the markets they dominate will themselves be growing."Mr Powe's huge fund has only around 85 holdings. "Anything more than 100 holdings is not desirable, even with such a large fund. It is dangerous to set an arbitrary limit, but it would be unusual for us to have more than 100 stocks. Although diversity is a good thing, you do not want to dilute the portfolio and it is difficult to keep on top of more than 100 companies at one time."And size is no barrier to delivering growth. "I would never use the fund size as an excuse for poor performance," he says "If it underperforms, it is my responsibility.

Nokia and Ericsson are the largest holdings because we believe their growth potential is ahead of the market average."But it is more likely the fund will invest in companies yet to register in the major market indices. Mr Powe cites Intershop Communications, the fund's third-largest holding (4.1 per cent) behind Nokia (5.3) and Ericsson (4.6) as an example. "It may be we hold a company that is not making money, but whose product is clearly rapidly growing its market share, such as Intershop, which is a German e-commerce service provider. The important thing is that we have to have a conviction of the growth potential of a company that is greater than the market's view This means we can hold major stocks. "We are `growth' investors, rather than `value' investors, but we are loathe to pay too much for that growth. "The fund invests in attractive businesses that are growing quickly and have carved out dominant positions in growing industries," he says.

"We are investing in companies that I, or someone on the team, identified as having the potential to grow faster than the average for the universe we pick from. Decisions have to be made swiftly by the person managing the fund but I have a team of 25 looking at growing companies within Europe and that gives us a tremendous advantage."The fund's holdings will tend to be in medium- and small-cap stocks, but not exclusively. I spent a lot of time on economic and political matters, like the impact of French election results or German economic statistics. That is not the approach we use now, which is much more stock-specific."INVESCO GT European Growth is focused on its growth objective.