Baillie Gifford American: November 2021 fund update

Baillie Gifford American: November 2021 fund update

This fund is a great way to invest in disruptive businesses with strong growth prospects in the world’s largest stock market

The managers benefit from the research carried out by a large bank of analysts

The managers have delivered strong returns to investors over the last five years in part due to their growth-focused investment style being in favour

This fund features on our Wealth Shortlist of funds chosen by our analysts for their long-term performance potential

How it fits into a portfolio

Baillie Gifford American aims to grow an investment over the long term. The manager’s growth style of investing aims to benefit from investing in exceptional growth businesses and holding them for long enough to reap the rewards. We think this fund could work well in a portfolio with little exposure to the US, invested for long-term growth. Its focus on large companies means it could also sit well alongside a US equity fund focused on medium-sized or higher-risk smaller companies, or a US fund with a value bias. Manager

The team behind the fund is made up of four talented investors. Tom Slater joined Baillie Gifford in 2000 and has risen up the ranks to become Head of US Equities. Slater is also joint manager of Scottish Mortgage Investment Trust and has been co-manager of this fund since 2016. Gary Robinson has been with Baillie Gifford since 2003 and has experience of working in their Japanese, UK and European equity teams prior to joining the US equity team. Robinson has been co-manager of this fund since 2014.

Kirsty Gibson joined Baillie Gifford after graduating in 2012 and has been a co-manager of the fund since the start of 2018. Dave Bujnowski is the fourth and final co-manager of the fund. After previously working for UBS and Coburn Ventures he joined Baillie Gifford in December 2018 initially as an Analyst. During his time at Coburn Ventures, Bujnowski provided research for investors, including Baillie Gifford. As a result he was familiar with the culture and investing philosophy at the company ahead of joining.

In May 2020, 17 months after joining Baillie Gifford, he was promoted to co-manager with the ability to make investment decisions on the fund. Bujnowski continues to be based in New York but remains in close and regular contact with Slater, Robinson and Gibson, who are based in Edinburgh. We think the managers are well resourced to focus on the job in hand and they also have access to a wider team of almost 40 analysts who spend time researching US companies. Process

The managers invest in companies with high growth potential that they think could be capable of delivering exceptional returns over the long run. They believe that companies with resilient business models make for good long term investments and that corporate culture can be a key component of company performance and ultimately investor returns although of course there are no guarantees.

Culture is difficult to measure and capture. But the managers believe it’s one of the most underappreciated drivers of long-term returns. Companies with a strong culture are often adaptable, durable and willing to invest for the future at the expense of short term profits. And although there’s no exact science, they believe that it’s these kinds of companies that are often the ones to really deliver on their vision and purpose.

The managers spend a lot of time thinking about industry dynamics and developing trends across the economy, preferring to think of their investments in themes rather than sectors. They’ve grouped them into nine distinct themes, the largest of which include: the future of commerce (30.7%), innovative healthcare (21.0%) and new enterprise (17.7%). The numbers in brackets indicate how much of the fund is invested in companies they think will profit from each trend playing out over the long term (as of the end of September). Many of these businesses disrupt old ways of doing things. In the future of commerce category, the trend the fund has the largest exposure to, you’ll find businesses like e-commerce platforms Shopify and Wayfair.

Founder involvement is another element that the managers view positively. They believe these individuals, who usually still have much of their wealth tied up in the business, often possess the strong vision that’s required to continue growing the company. The managers believe few companies are capable of delivering exceptional returns over the long run, so they prefer to run a relatively concentrated fund of between 30 and 50 companies. This means each one can contribute significantly […]

source Baillie Gifford American: November 2021 fund update

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