James Anderson, joint manager of Scottish Mortgage, has announced that he will be retiring from Baillie Gifford in April next year.
The strength of the £ 16 billion investment trust will be given full control to current co-manager Tom Slater, who will also be joined by Lawrence Burns as the new assistant manager.
Anderson has managed Scottish Mortgage since 2000, helping it become the UK’s largest and most popular investment trust with a return of 1,530 percent – well ahead of 269 percent Total return of the MSCI World Index over the same period.
James Anderson of Scottish Mortgage will be retiring from Baillie Gifford next year
Since the news was announced this morning, the trust’s share price has fallen 1.82 percent, though commentators insist that investors needn’t worry as Slater and Anderson worked on a shared philosophy.
Anderson has been with the Edinburgh-based investment management firm for nearly four decades and has been a partner since 1987.
Scottish Mortgage returns have added confidence in the FTSE 100, notably making it the 31st largest company in the market. Major 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 encouraged us to be ambitious as a company and introduced a long-term, global, no-index approach to our investments. Most importantly, James has delivered remarkable investment returns for our clients. We give our customers a year in advance to announce that they are leaving the company.
“Our transition process has stood the test of time and we have developed talented successors on every James team over the past few years.”
Anderson achieved a lot in his time at Baillie Gifford, from leading the European equity team to co-founder of the long-term global growth strategy in 2003.
From its inception in 2003 until two years ago, he was Chairman of the International Growth Portfolio Construction Group.
He said: ‘I have great admiration for Tom and Lawrence. They are both thoughtful, dedicated, and ambitious investors with a willingness to learn and a great ability to work with great companies. I couldn’t be happier than having them as my successors. “
Scottish Mortgage has grown more than 1,500% over the past twenty years, well above the AIC Global industry averages and FTSE World benchmark returns
The Scottish Mortgage philosophy continues
John Moore, senior investment manager at Brewin Dolphin, said today’s news shouldn’t change investors’ minds about Baillie Gifford or Scottish Mortgage.
He said: ‘James Anderson was one of the best fund managers of his generation and has brought the Scottish fund management and investment trust industry back into the spotlight for all the right reasons.
‘His resignation has been planned for some time and Baillie Gifford is well prepared – Co-Manager Tom Slater has been instrumental in management and presentations over the past few years.
‘In another perspective, Baillie Gifford has also invested heavily in people and processes, with the Shanghai office being a concrete example of this.
In that regard, while the announcement should come when the “growth” approach to investing sells off amid concerns over the inflation outlook and rising interest rates, investors shouldn’t read too much into the timing – especially how it will be be there for at least the next year.
“Losing such a recognizable name might unsettle some investors, but Baillie Gifford and Scottish Mortgage have had an excellent long-term track record and some immediate uncertainties shouldn’t change attitudes either.”
Ryan Hughes, Head of Active Portfolios at AJ Bell, agreed that the news is likely to cause some concern for the thousands of investors, but that they should remember how Baillie Gifford works with the investment process that has become firmly established in the team-based Approach is embedded.
He added, ‘With Anderson not stepping down in over a year, this is well planned with a clear handover process for Lawrence Burns to become the trusted assistant manager in support of Slater.
‘Anderson has for many years helped make Scottish Mortgage a phenomenal investment trust. His clear, staunch approach is a driving force behind his willingness to invest in and hold early-stage companies as they become global winners with Amazon, Tesla and Alibaba.
‘While this announcement may be troubling to investors, the strength of the team-based approach, long handover time and continuity provided by Tom Slater shouldn’t create major concerns.
‘Slater has been with Baillie Gifford for over 20 years and has been a manager of the trust for 10 years ensuring he has a thorough understanding of the portfolio. As a result, I don’t expect a change in approach that should hopefully reassure investors that the investment process will remain intact.
However, one analyst says “take profits with you”
However, given the very strong performance of confidence over the past few years and the recent wiggle in growth stocks, there will be some comment that Anderson’s retirement announcement may be at the forefront of the market.
Stifel’s investment trust analysts have suggested investors take profits while the price has risen sharply in recent months.
Analyst Iain Scouller said, ‘This was primarily to ensure that investors are managing “stock-specific risk” and that portfolios are not overweighting in the stocks.
‘When stocks fell below 1,000 pence a couple of weeks ago, we suggested holding back profit-taking as stocks had suddenly grown to a mid-teens discount.
‘Since then, price has rebounded, with the discount closing significantly, with some rebound in technology stocks and confidence resuming share buybacks.
‘We view Scottish Mortgage as a core holding that is different from many other trusts. However, as stocks are trading close to net asset value again, we recommend managing portfolio risk in cases where investors have a significant percentage of their portfolio in the trust by taking profits. ‘
Leaving behind an “outstanding” legacy
Anderson’s resignation comes at a time when Scottish Mortgage is one of the top performing and most popular investment trusts in the country.
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Despite the recent slump, investment experts, commentators and investors continue to trust his approach, which has continued even after the industry has gone.
Tilney’s Jason Hollands said, ‘During James Anderson’s long tenure at Scottish Mortgage, it has truly been the figurehead of the investment trust sector and in many ways has helped reinvent the perception of investment trusts as a whole.
“Despite its venerable name and history, Scottish Mortgage has been the vanguard of investing in the latest industries of the future.”
It has really become the flagship for the investment trust sector
Jason Hollands by Tilney
Fiona McBain, Chairwoman of Scottish Mortgage, commented on Anderson’s outstanding contribution to the trust: ‘His approach to identifying and holding companies with transformative growth has helped drive economic progress and deliver exceptional returns for shareholders.
‘James also pioneered our investments in private companies, one of the Trust’s key strategic initiatives. He and Tom is constantly striving to observe, learn, and improve.
‘This has resulted in an investment philosophy that will continue to evolve. I and my colleagues look forward to working with James, Tom and Lawrence for the coming year, and then with Tom and Lawrence. ‘
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