James Anderson, joint manager of Scottish Mortgage, has announced he will retire from Baillie Gifford in April next year.
The stalwart of the the £16billion investment trust will pass full reins to current co-manager Tom Slater, who will also be joined by Lawrence Burns, as a new deputy manager.
Anderson has managed Scottish Mortgage since 2000, helping it become the UK’s biggest and most popular investment trust, with a return of 1,530 per cent – way ahead of the 269 per cent total return on the MSCI World Index over the same period.
Scottish Mortgage’s James Anderson will retire from Baillie Gifford next year
Since the news was announced this morning, the trust’s share price has fallen by 1.82 per cent, though commentators insist investors have nothing to worry about, as Slater and Anderson have worked together with a shared philosophy.
Anderson has worked at the Edinburgh-based investment management firm for almost four decades, and has been a parter since 1987.
Scottish Mortgage’s returns have propelled the trust into the FTSE 100, remarkably making it the 31st biggest company in the market. It’s big global growth investments have included Tesla, Amazon, Facebook, Alibaba and Tencent.
Andrew Telfer, joint senior partner at Baillie Gifford, said: ‘James has been central to the strategic leadership and growth of Baillie Gifford.
‘He has encouraged us to be ambitious as a firm and has instilled a long term, global and index-agnostic approach to our investing. And, most importantly, James has achieved remarkable investment returns for our clients. We are giving our clients a year’s notice that he is leaving the firm.
‘Our transition process is tried and tested over generations, and we have developed talented successors in each of James’s teams in recent years.’
Anderson has achieved plenty during his time at Baillie Gifford, from leading its European equity team to co-founding the Long Term Global Growth Strategy in 2003.
He also chaired the International Growth Portfolio Construction Group from its inception in 2003, until two years ago.
He said: ‘I have huge admiration for Tom and Lawrence. They are both thoughtful, dedicated and ambitious investors with a willingness to learn and an outstanding ability to partner with great companies. I couldn’t be happier than to have them as my successors.’
Over the past twenty years, Scottish Mortgage is up more than 1,500%, way ahead of its AIC Global sector average and FTSE World benchmark returns
Scottish Mortgage’s philosophy will continue
John Moore, senior investment manager at Brewin Dolphin, said today’s news shouldn’t change investor views on either Baillie Gifford or Scottish Mortgage.
He said: ‘James Anderson has been among the best fund managers of his generation and has returned Scottish fund management and the investment trust industry to the spotlight for all the right reasons.
‘His retirement has been planned for some time and Baillie Gifford is well prepared – co-manager Tom Slater has been a leading contributor to management and presentations over the last few years.
‘On a wider angle, Baillie Gifford has also invested heavily in people and process, with the company’s Shanghai office a tangible example of this.
‘In that respect, whilst the announcement does come when the “growth” approach to investing is experiencing a sell-off amid worries over the prospects for inflation and rising interest rates, investors shouldn’t read too much into its timing – particularly as he will be around for at least the next year.
‘Losing such a recognisable name could unnerve some investors, but Baillie Gifford’s, and Scottish Mortgage’s, long-term track record is excellent and some immediate uncertainty should not change views on either.’
Ryan Hughes, head of active portfolios at AJ Bell, agreed the news is likely to cause some worry to the thousands of investors but that they should remember how Baillie Gifford work with the investment process being firmly embedded in the team-based approach.
He added: ‘With Anderson not stepping back for over a year, this has been well planned with a clear handover process for Lawrence Burns to become deputy manager on the trust to support Slater.
‘Anderson has helped build Scottish Mortgage into a phenomenal investment trust over many years with his clear, high conviction approach being a driving force behind its willingness to invest in early stage companies and hold them while they become global winners with Amazon, Tesla and Alibaba all being great examples.
‘For investors, while this announcement may be unsettling, the strength of the team-based approach, long handover period and continuity through Tom Slater shouldn’t result in major concerns.
‘Slater has worked at Baillie Gifford for over 20 years and been a manager on the trust for the last 10 years, ensuring that he knows the portfolio inside out. As a result, I expect no change to the approach which should hopefully give investors reassurance that the investment process will remain intact..
But one analyst says: ‘Take some profits’
However, given the very strong performance delivered by the trust in recent years and recent wobble in growth stocks, there will be some commentary that perhaps Anderson’s retirement announcement is at the ‘top’ of the market.
Investment trust analysts at Stifel has been suggesting that investors take some profits whilst the price has been rising strongly in recent months.
Analyst, Iain Scouller, said: ‘This has been primarily to ensure that investors manage “stock specific risk” and portfolios do not become too heavily weighted in the shares.
‘When the shares fell below 1,000p a couple of weeks ago we suggested holding off taking-profits given the shares had suddenly widened to a mid-teen discount.
‘Since then the price has recovered, with the discount narrowing significantly, with some bounce in tech stocks and the trust resuming share buybacks.
‘We view Scottish Mortgage as a core holding that offers something different to many other trusts. However, with the shares again trading close to NAV, we suggest managing portfolio risk in cases where investors have significant percentages of their portfolio in the trust by taking some profits.’
Leaving an ‘outstanding’ legacy
Anderson’s retirement comes at a time when Scottish Mortgage is one of the country’s best performing and best-loved investment trusts.
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Despite its recent slump, investment experts and commentators and investors alike continue to have faith in its approach, which will continue even after the industry stalwart’s departure.
Jason Hollands, of Tilney, said: ‘During James Anderson’s long tenure at Scottish Mortgage, it really has been come the poster-boy for the investment trust sector and in many ways has been instrumental in reinventing perceptions of investment trusts altogether.
‘For despite its venerable sounding name and history, Scottish Mortgage has been the vanguard for investing in cutting edge industries of the future.’
It really has been come the poster-boy for the investment trust sector
Jason Hollands, of Tilney
Commenting on Anderson’s outstanding contribution to the trust, Fiona McBain, chair of Scottish Mortgage, added: ‘His approach of identifying and holding transformational growth companies has helped drive economic progress and delivered exceptional returns for shareholders.
‘James has also pioneered our investments in private companies, one of the trust’s most important strategic initiatives to date. He and Tom constantly seek to observe, learn and improve.
‘This has resulted in an investment philosophy that will continue to evolve. I and my fellow directors look forward to working with James, Tom and Lawrence over the coming year, and with Tom and Lawrence after that.’
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