Imagining the upside as a growth investor; and other philosophies

Rather than chasing market trends or tethering itself to benchmark indices, the Baillie Gifford Long Term Global Growth team seeks out exceptional companies globally — wherever they may be — and gives them the time and space to compound value over many years.

Since its earliest days — including investments in rubber at the dawn of Ford’s mass-produced Model T — the company has navigated market shocks, bouts of volatility, and sweeping political change. Through it all, a steadfast long-term mindset has served to consistently add value over rolling five-year periods, often by turning volatility into opportunity.

Today, the Long Term Global Growth team focuses on a deliberately small number of high-conviction ideas — typically 30 to 40 of the world’s most promising growth companies — each with the potential to grow to many times its current size. 

He says the decision to step back from tracking market indices is one that opens up opportunities. 

“Most equity market participants behave like bond investors — they are so terrified of avoiding downside that they are not willing to embrace the potential for wide ranges of outcomes and the upside that comes with that.” 

Investing in this way, and allowing companies time to grow, means being comfortable with uncertainty and willing to look “quite silly for quite long periods of time”, Tim says. 

This approach led Baillie Gifford to invest early in companies like Amazon, Tesla and Nvidia. But the firm will sell out if they don’t see that strong growth continuing. 

“We have owned all of the Magnificent 7 (Apple, Microsoft, Amazon, Alphabet, Meta, Nvidia, and Tesla),” he says. “We’ve moved on from five of them because we’re onto the next thing.

“The biggest investment mistakes that we've made are failures of imagination, where we've not been imaginative enough to think about what can go very, very right,” Tim says. 

“When we have a stock discussion, the first 30 minutes – no one is allowed to say anything negative. It’s all about stress-testing the upside.”

Looking forward, Baillie Gifford is excited about the future of AI, space technology, and companies addressing global challenges such as cyber security and supply chain inefficiencies. 

Among the qualities they look for are adaptability, management teams that are heavily invested in the success of the company, appropriate governance structures and alignment. 

“I think the most adaptable management teams are going to win,” Tim says, describing them as “future-proofers”, rather than “sponge-wringers” obsessed with getting the last drops of value out of their current business model. 

“We have a lot of founder-led companies in the portfolio, which tends to lead you towards the most adaptable businesses,” Tim says. “We want to back exceptional companies doing exceptional things.”