FUND FOCUS
DON’T ask fund manager Douglas Brodie for his view on Brexit and its potential impact on the UK stock market. Or for that matter his take on the US presidential election in November and its effect on American equities.
Why? Because you won’t get detailed answers – he’s not particularly interested.
While most of the investment community is busy pontificating about Brexit and the US election, Edinburgh-based Brodie prefers to focus on what he does best – hunting down the business success stories of the next decade. Firms which he reckons will transform the industries they are in.
Brodie, who works for investment house Baillie Gifford, says: ‘I’m a stock picker. The young businesses I invest in will not live or die according to the outcome of the referendum or the presidential election. Their future will be determined by the quality of management and of the underlying business.’
He employs his stock picking skills as manager of investment fund Baillie Gifford Global Discovery, which he has managed since launch in May 2011, and more recently investment trust Edinburgh Worldwide.
With both vehicles, his mission is in theory simple – to scour the world for listed businesses with market values of less than $5billion (£3.55billion) which he believes have the potential to become big, successful firms.
It involves painstaking research, travelling the globe to meet the heads of companies he is thinking of investing in, and then patience waiting to see if the investments pay off. Winners – his term for holdings that come good – are run with, even if their market values break the $5billion threshold.
So far, Brodie can hold his head high. With Global Discovery approaching its fifth anniversary, it has delivered returns of more than 80 per cent. Over the past three years, only one other fund in its global growth peer group – Fundsmith Equity, run by the legendary Terry Smith – has a better investment record.
Edinburgh Worldwide’s record is less impressive – up five per cent since Brodie took over in January 2014, though it is too early for hard and fast judgments to be made. Unlike the fund, the trust holds a small portfolio of unquoted companies.
Among his success stories for Global Discovery are America’s Tesla Motors, which he bought in early 2013 at $36 per share, and French biopharmaceutical firm Cellectis, bought in June 2013 at €4.8 (388p). Last week, they were $265 and €26 respectively.
‘I bought Tesla shares around the time it produced its first electric vehicles,’ says Brodie. ‘It was a classic case of backing a business on the cusp of commercialisation. It’s proved a winner. Equally, Cellectis has proved a winner as it revolutionises the way cancers are treated.
‘Both have changed the shape of the industries they are part of.’
Global Discovery has recently made it on to fund broker Chelsea Financial Services’ list of 100 ‘elite’ funds. Managing director Darius McDermott says it is not for the faint-hearted because of its strong growth bias, but the returns so far are excellent.
Brodie admits his approach is high risk, high reward, but says he strives to reduce individual stock risk by holding more than 100 firms in both Global Discovery and Edinburgh Worldwide.
‘We’re not trying to beat an index by the odd percentage point,’ he says. ‘We’re looking to buy as many investment gems as possible in the hope of making multiple times returns on our money.’