James Anderson, manager of the £16 billion Scottish Mortgage Investment Trust (SMT), is to leave the business next year. After nearly 40 years at Baillie Gifford and 21 years at the helm of Scottish Mortgage, the veteran investor will step back from the trust in April 2022.
Scottish Mortgage has gained a reputation for being able to spot fast-growing disruptive businesses and for bringing the opportunity to invest in unlisted companies to retail investors at a low cost – the trust’s ongoing charge is just 0.36%.
Since 2015, Anderson has co-managed the trust with Tom Slater, who will continue as manager. Lawrence Burns will become deputy manager with immediate effect.
Fiona McBain, chair of Scottish Mortgage, says: “[James’s] approach of identifying and holding transformational growth companies has helped drive economic progress and delivered exceptional returns. He has also pioneered our investments in private companies, one of the trust’s most strategic initiatives to date.”
With a global mandate, the trust has had the freedom to invest across the globe and the market cap spectrum. Some of the manager’s most notable calls were investing in Chinese internet giant Alibaba (BABA) and music streaming service Spotify (SPOT) before they listed on the stock market. He has also long held a large stake in Tesla, a stock which notoriously surged 700% in 2020. He first invested in Amazon (AMZN) back in 2004 – the business’s shares have grown from around $50 to $3028 since then.
Jonathan Miller, head of UK Manager Research at Morningstar, says: "James Anderson has championed long-term, high-conviction investing. A number of key positions held today have at some point seen falls of more than 50% but Anderson and his colleagues stayed committed, with a close eye on the disruption and change these businesses can bring. Never one to mince his words, Anderson is part of a cohort of long-standing partners at Baillie Gifford who have been key to instilling the firm's investment philosophy."
First launched in 1909, Scottish Mortgage has delivered outstanding long-term performance, with annualised returns of 24.89% over 10 years, and 35.88% over five years. Over the past 12 months it has achieved gains of 126%, and was the best performing Morningstar rated investment trust in 2020. Since Anderson took the helm in 2000, the FTSE 100 trust has delivered a return of 1,560%, compared to a return of 269% from the MSCI World index.
What Should Investors Do?
Investors in the trust will now be wondering whether to stick with the trust or depart with the manager – indeed, the share price dropped 1.8% as the market opened on Friday morning. But commentators point out that co-manager Tom Slater is “fully immersed” in Anderson’s approach.
Ryan Hughes, head of active portfolios at AJ Bell, says: “It’s important to remember how Baillie Gifford works, with the investment process firmly embedded in a team-based approach. With Anderson not stepping back for over a year, this has been well-planned with a clear handover process.”
Adrian Lowcock, head of personal investing at Willis Owen, agrees: “The handover is clearly well planned and the early announcement gives investors plenty of time to review their holdings and make informed decisions.”
Anderson joined Baillie Gifford in 1983, led the European Equity Team and later co-founded the firm’s Long Term Global Growth Strategy. Morningstar analysts downgraded the trust from a coveted Gold Analyst Rating to Silver over concerns around the cost of its debt, which push the representative annual charge up from 0.36% to 0.77%. At the time, Morningstar analyst Robert Starkey said: “Scottish Mortgage continues to deliver on its unique mandate and the combination of a best-in-class team with a well-executed process awards the strategy a rating of Silver.”
