Anderson, who heads up the £1.76bn Scottish Mortgage Investment Trust, thinks UK investors in particular focus too heavily on the negatives. "I cannot understand why everyone is so miserable," he said. "Perhaps it’s because we are by our nature quite miserable, but it seems there is an obsession with the macro economic climate at the moment."
"When you pick up a paper, whether it’s the Times, the Mirror or the Guardian, one gets the impression that the world is ending. In many ways it’s because of what we’ve gone through recently – most of us had a terrible experience in 2008. However, I feel compelled to quarrel this pessimism."
Anderson points to the "extraordinary pace" of technological advancement as the principal reason why long-term investors should be more upbeat.
"About a year ago, the original Apple computer was sold at auction – a machine that has the capability of downloading 1/29th of a music track," he explained. "This shows just how far we have come."
"More importantly, however, is the fact that technological change is itself accelerating. The effects that recent developments could have on healthcare are especially interesting. Just before Steve Jobs passed away he said that if he were an entrepreneur growing up today, he’d target the healthcare industry."
"In 15 to 20 years it’s not just going to be surgery that robots will be doing; it’s very conceivable that a machine will be able to do 75 per cent of the jobs we do. Whether this will be allowed to happen, of course, is a different matter."
Anderson owns both Intuitive Surgical, which designs and builds robotic surgery systems, and Illumina, which develops array-based solutions for DNA, RNA, and protein analysis, in the trust’s top-10 holdings. He also has a significant weighting to internet search engines Google and Baidu, as well as Amazon.
The manager acknowledges that comparisons can be drawn with the tech bubble in the early 2000s, but he thinks this is a long way off yet.
"We’d love to find more of these tech-healthcare companies, but it’s difficult to find many that are quoted, in the same way that it was difficult to find the internet companies in the late 1980s," he explained.
"Eventually, yes, there is a pretty good chance there could be a bubble in these companies, but we’re not anywhere close to that. It’s only when the non-believers start buying that you need to ask yourself questions."
He also points to the pace of economic change in China as a big source of opportunities for a global growth manager.
"China’s ability to change from a low-cost exporter to one that is almost entirely reliant on the domestic market in the space of just three years is an incredible achievement," he said. "There are a lot of companies that are set to benefit from this."
Anderson acknowledges that like the majority of Baillie Gifford managers, he has a longer-term investment horizon than the majority of his investors, and has little interest in short-term market noise.
"Don’t own Scottish Mortgage if you cannot accord a five-year time horizon," he said. "We are very different to a lot of our peers, but I’d personally say don’t worry about Europe if you’re a long-term investor."
"Please tell me why capital markets are reacting to Dutch elections? Yes, Greece may well go under, but 3 per cent growth in Germany creates a new Greece."
James Budden, director at Baillie Gifford, says Scottish Mortgage Investment Trust intentionally changed its investment style in the aftermath of the dotcom crash.
"After 2000 there was more pressure on funds to venture more away from the index, because everything was so correlated," he explained. "The likes of F&C, for example, took on more of a private equity focus."
"Scottish Mortgage was transformed more into a blue sky growth fund, investing in companies on a five-year view. You’re not going to see the likes of Vodafone, BP and Shell in the top-10 – it’s more about finding the next big thing."
Performance of trust vs sector and benchmark over 10-yrs
| Name |
3-yr |
5-yr |
10-yr |
| Scottish Mortgage Investment Trust |
78.6 |
34.11 |
139.98 |
| FTSE All-World |
44.07 |
19.59 |
65.79 |
| IT Global Growth |
46.54 |
6.81 |
92.83 |
Source: FE Analytics
In spite of the trust’s long-term style, it has outperformed both its peer group and benchmark in the medium-term, as well as over 10 years. According to FE data, Anderson has returned 34.11 per cent over five years, compared with 19.59 per cent from the FTSE All Word index.
With a track record going back to 1909, the £1.76bn Scottish Mortgage Investment Trust is one of the largest and most established in the AIC Investment Companies universe. Anderson has headed up the trust since April 2000.
It has a total expense ratio (TER) of 0.5 per cent and a one-year historic yield of 1.79 per cent.