Investors in UK fund manager Baillie Gifford’s global share funds have seen very strong performance recently, partly due to its investments in companies like Tesla and Amazon. However, with Baillie Gifford specialising in finding the global success stories of tomorrow – often when they’re still at start-up stage – the real rewards could come to those investors with the patience to take the long-term view.
Different approach, different results
Baillie Gifford is an Edinburgh-based fund manager with a long history of investment success, having been around since 1908. Unlike most investment managers, Baillie Gifford’s approach is not about reacting to recent events, trying to time markets or seeking short-term performance. Instead, they focus less on what a company is doing now and more on what it can become – giving them an enviable track record in finding disruptive global companies with the potential to grow to many times their current size.
Colonial First State gives you the opportunity to invest with Baillie Gifford via your super, pension or managed investment fund.
When patience pays
In July 1994 a computer engineer called Jeff Bezos launched an online bookstore, working from his garage near Seattle with a handful of employees and with his parents among the start-up investors. Twenty-seven years later, Amazon is a global giant with a market capitalisation of $2.52 trillion Australian dollars.1
Baillie Gifford first invested in Amazon back in 2005, since when Amazon’s share price has risen more than 6,500%. Put another way, if you’d invested $5,000 then and, like Baillie Gifford, had the patience and discipline to stay invested for the long term, your investment would now have grown to over $330,000.2
“The biggest mistake you can make isn’t failing to sell something you should have sold, it’s selling something you should have held onto.”
The next Amazon?
Of course, not every business Baillie Gifford invests in will grow as big as Amazon. But while the Baillie Gifford team invests in companies at different stages of their evolution and in different industries, they always have an eye on long-term growth potential. That’s why the list of companies they’re invested in (see below) contains some household names, but also many less familiar companies that have the potential to rise to global prominence in the years ahead.
Meituan Dianping, for example, is a Chinese company that aspires to be an ‘Amazon of services’ via its food delivery and leisure bookings app. Baillie Gifford first invested in Meituan in 2015 when it was still privately owned. At that time, Meituan’s ambition to deliver tens of millions of meals a day sounded completely improbable – yet it has since exceeded those targets.
Illumina is another innovative company in which Baillie Gifford sees long-term growth potential. Based in San Diego, California, Illumina is a pioneer in genomic sequencing – the process of identifying variations in DNA that can cause certain genetic conditions. Illumina is a leader in this new field, which has the potential to revolutionise healthcare especially in areas like oncology (cancer treatment), rare diseases and pre-natal care.
The top 10 stocks in the Baillie Gifford Long Term Global Growth Fund (as at 31 May 2021):
- Amazon (online retail and cloud computing services)
- Meituan Dianping (food and leisure services e-commerce)
- Tencent Holdings (e-commerce, entertainment, artificial intelligence and technology)
- Kering SA (luxury goods retailing)
- Alibaba (e-commerce, digital media and entertainment)
- Tesla (electric vehicles and clean energy)
- Illumina (genetics)
- Pinduoduo (online grocery shopping)
- ASML Holding NV (electronics)
- Nvidia Corp (computer graphics and artificial intelligence)
“Really big disruptions and opportunities for outstanding returns exist where new technologies coalesce to create entirely new possibilities.”
Imagining what could be, not what is
Baillie Gifford’s 113 years of investment success hasn’t come from taking a short-term view of the world or extrapolating from the recent past – in fact, they ignore what sharemarkets are doing most of the time. Instead, they concentrate on identifying the trends and technologies that will shape the future of our fast-changing world, and then trying to find those companies poised to take advantage.
Aiming to predict what the world might look like in 10 or 20 years’ time means the team is more likely to be talking to future-thinking academics and scientists than to investment analysts and stockbrokers. Curiosity and creativity are building blocks of the Baillie Gifford approach, allowing them to connect with people who can offer a different view of the world.
“We’re not trying to be slightly more accurate than the next investor, we’re trying to see things that they don’t.”
OWN A SMALL STAKE IN TOMORROW'S BIG BRANDS
Investing in international shares (also known as global equities) through a managed fund, where your money is pooled with lots of other people’s, lets you easily make a small investment in the big companies of the future.
You can invest in the Baillie Gifford Long Term Global Growth Fund or Baillie Gifford Global Stewardship Fund from as little as AU$5,000. And if you’re already an investor with Colonial First State and Baillie Gifford, you can keep adding to your investment from just $100 per month. We can accept amounts below the minimum at our discretion.
About the Baillie Gifford funds
Baillie Gifford Long Term Global Growth Fund
The Baillie Gifford Long Term Global Growth Fund focuses on investing in exceptional companies from around the world with the potential to achieve market-defying growth over the very long term.
Baillie Gifford Global Stewardship Fund
The Baillie Gifford Global Stewardship Fund is also a long-term global equities growth fund, but focuses on investing in companies that aim to achieve best practice on governance and sustainability matters, supporting Baillie Gifford’s belief that companies that are a net benefit to society and balance the interests of all stakeholders are more likely to prosper in the long run.
THE RISKS OF INVESTING
All investments carry a level of risk. Growth assets such as shares have the potential to deliver higher returns over the long term but with greater risk of losing money in the short term.
It’s also important to remember that strong investment returns in the past are no indication of what will happen in future. Long-term performance requires risk taking and ambition so the Fund will experience periods of underperformance in various stages of the market cycle.
Speak to your financial adviser if you’re unsure if investing in the Baillie Gifford Long Term Global Growth Fund or Baillie Gifford Global Stewardship Fund is right for you. If you don’t have a financial adviser, we can help you find one. Or please give us a call on 13 13 36 to learn more.
Ready to invest?
Colonial First State’s partnership with Baillie Gifford gives Australians the opportunity to invest in Baillie Gifford’s flagship Long Term Global Growth Fund and Global Stewardship Fund (the Funds) via their super, pension or managed investment fund. The Funds are available from Colonial First State as one of the investment options in our FirstChoice product suite.*
Are you new to Colonial First State?
The Baillie Gifford Long Term Global Growth Fund and Baillie Gifford Global Stewardship Fund are available to retail investors within Colonial First State’s FirstChoice products.*
Step 1: Download and read the relevant product disclosure statement (PDS).
Step 2: Apply online
ARE YOU AN EXISTING MEMBER?
If you are an existing Colonial First State member and would like to make a new investment, or add to an existing investment online, you will need to login to FirstNet Investor using your Member ID (OIN) and password. You will need to confirm you have a copy of a current Product Disclosure Statement.
We're here to help
Speak to your financial adviser if you’re unsure if investing in the Baillie Gifford Long Term Global Growth Fund or Baillie Gifford Global Stewardship Fund is right for you. If you don’t have a financial adviser, we can help you find one.
Or please give us a call on 13 13 36 to learn more.
1 Source: Nasdaq , 12 July 2021. Calculated at $1 USD = $1.34 AUD
2 Baillie Gifford: can a new generation keep riding the tech boom, Financial Times, 22 June 2021
* The Fund is also available in the FirstChoice Personal Super & Pension and the FirstChoice Investments product suite. These products are closed to new investors, however existing members are able to invest in the Fund.