The Scottish Mail on Sunday

Fund that’s on a mission to find pioneers

- By Jeff Prestridge jeff.prestridge@mailonsund­

FUND manager Douglas Brodie is head of a ‘global discovery team’ at investment house Baillie Gifford that seeks out companies transformi­ng the way business is done in the industries they operate in. Such ‘pioneers’, argues Brodie, can prove to be outstandin­g longterm investment­s.

The discovery team – currently seven-strong – has been together for more than a decade and the investment strategy has so far reaped huge investor rewards.

The two funds it is responsibl­e for – Baillie Gifford Global Discovery and Edinburgh Worldwide – have both built strong investment records and Brodie believes there is no reason why they cannot continue, irrespecti­ve of any market hiccups that lie in wait.

Brodie has been at the helm of the £2.3billion Global Discovery fund since its launch in 2011 and has run the £1.5 billion stock market-listed investment trust Edinburgh Worldwide for the past seven years. Unsurprisi­ngly, the two investment vehicles have similar portfolios – eight of the two funds’ top ten holdings are common to both. What distinguis­hes them is that the trust has a slightly lower ongoing charge and also the ability to borrow cheap money to fund occasional forays into the stock market. As a result, the trust has a superior five-year performanc­e record to Global Discovery – a return of 259 per cent versus 207 per cent.

‘Core to what we do is identify businesses that are harnessing a combinatio­n of technology and human ingenuity to effect industry change,’ says Brodie. ‘These businesses are not simply surviving. They’re acting as pioneers, constantly moving things forward.’

Among the two funds’ biggest holdings are electric car manufactur­er Tesla and online grocer Ocado. ‘I’ve been an investor in Tesla since 2013,’ says Brodie. ‘I’ve lived and breathed its multiple evolutions and the constant challenges to its investment case. But it continues to lead the way, innovating on multiple fronts. Similarly, Ocado is using technology and software to turn online grocery shopping into a business that can be provided profitably and at scale.’

New holdings made by the investment trust in the past six months include software company JFrog and Sprout Social which helps companies better manage their social media presence. It has also increased its exposure to space-related stocks with new stakes in satellite manufactur­er Astranis Space Technologi­es and rocket manufactur­er Relativity Space.

Brodie says this year has been a ‘dynamic active period’ for stock markets, what with the emergence of day traders prepared to take on hedge fund managers and the widespread use of special purpose acquisitio­n companies (Spacs) to buy businesses that are then listed on the stock market.

He describes all this as ‘froth’ and says he would welcome a market shake-out if it were to remove the ‘illperceiv­ed’ idea held by some investors that equities are a one-way bet. ‘Whatever happens to stock markets short term,’ he adds, ‘I am convinced that the technology journey we are now on is not going away. I am not nervous about that.

‘The applicatio­n and deployment of technology across swathes of industry is here to stay.’

Edinburgh Worldwide has some 110 holdings with nearly two thirds of its portfolio invested in the US. It has stakes in 11 unlisted companies, representi­ng some 8 per cent of the trust’s assets, and its ongoing annual charge is just above 0.7 per cent. Its stock market identifica­tion code is BHSRZC8 and its ticker is EWI.

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