‘Netflix can launch into 100 countries overnight’

Baillie Gifford American is one of the top performing funds of 2018, having returned 25pc to investors since the start of the year. But with many of the so-called “Faang” stocks – Facebook, Apple, Amazon, Netflix and Google – among its biggest holdings, the fund’s performance has followed the fate of these firms and tailed off since the summer. Helen Xiong, who manages the fund along with Gary Robinson, Tom Slater and Kirsty Gibson, tells Telegraph Money why she thinks each of the Faang stocks needs to be judged on its own merits.

Who is the fund for?

Our objective is to grow wealth over the long term. We believe this long-term wealth creation is driven by a handful of companies. These firms are innovators, with the ability to transform the industries they operate in. We sit at the long-term end of the spectrum in terms of our holding periods as a fund. We change only about 15pc of the fund each year, so we look to hold each firm for six or seven years.

Is there a risk of being too reliant on tech companies?

It depends on your definition of technology. I think it is changing and broadening out. A decade or two ago technology would have very much been about Microsoft and Intel; it was a very narrow definition. Today almost every great company is a technology company in some way.

But none of them are just technology companies. Amazon is attacking the retail sector, Facebook and Google are targeting the $650bn (£510bn) global advertising industry.

This disruption is now hitting other areas of the economy. Netflix is innovating in the entertainment world, while Tesla is changing the automotive sector.

CV: Helen Xiong

A Warwick University economics graduate, Helen n Xiong joined Baillie Gifford in n 2008. She then became a co-manager of the American fund and has

Can these giant firms continue to grow at the same rate?

If you take Amazon, its revenues are about $180bn a year and it is growing by about 30pc a year organically. A company that size has never grown that fast before. No company worth $20bn or more has ever grown for 10 successive years. Amazon is into its ninth year of growth.

But these companies keep expanding their markets, and technology has been breaking down these geographic barriers. In the past, investors had a choice between BP in Britain and Exxon in America and they would be seen as the equivalent of each other. If one company was more expensive, you’d just buy the other. But that geographic distinction is becoming less important. In the old days you’d have to build new shops and factories. Now Netflix can launch into 100 countries overnight.

Baillie Gifford’s Helen Xiong tells Adam Williams why America’s tech giants have yet to hit a limit to growth

What characteristics unite the Faang stocks?

Ten years ago everyone was talking about the “Brics” countries, lumping Brazil, Russia, India, China and South Africa together into a group. But what we have seen in the last decade is that China has created an economy that is twice the size of the others combined. It has all been about China. Likewise, there has been a tendency for people to associate stocks with each other, e even though they are attacking very d different parts of the economy.

Despite their superficial connections, it is a mistake to label all these companies together. Ultimately they have very different characteristics.

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