However, this has meant several periods of losing money and higher volatility than the majority of trusts in the IT Global sector, an area where many active portfolios fail to beat the index.
Headed by Baillie Gifford’s James Anderson since April 2000 it also has one of the longest-running investment trust managers as well as one of the most highly regarded.
According to FE Analytics, since Anderson took over the trust it has returned 368.64 per cent, more than 200 percentage points greater than the IT Global sector average and almost three times the gain in the FTSE All World index.
Performance of trust, sector and index since April 2000
Source: FE AnalyticsHowever, the trust is currently on a premium while the Edinburgh Worldwide trust – also in the IT Global sector - at just £321m has not only nimbleness on its side but is also on a discount of 9.9 per cent. Its bigger Baillie Gifford stable mate is currently on a premium of 2.2 per cent.
FE Alpha Manager Douglas Brodie, head of Baillie Gifford's Global Discovery team, took over the fund in January 2014 as lead manager with John MacDougall as his deputy. Both trusts have ‘disruptive technology’ at the forefront of their portfolio and have extended their remit to allow five per cent to be invested in unlisted companies.
However, Brodie’s approach at Edinburgh Worldwide also includes a greater focus on smaller companies with a market cap of less than $5bn with an eye to early stage exposure in high growth stories.
Brodie argues that there is an ongoing stronger culture of innovation and entrepreneurialism lower down the market cap scale while greater market inefficiencies and anomalies can be found.
You could say it is a small cap version of Scottish Mortgage, says Charles Cade (pictured), head of research at Numis, albeit with a more diversified portfolio.
“It is quite differentiated from Scottish Mortgage which is more focused on global leaders that are already quite well-established such as Amazon and eBay,” he said. “This is buying medium and small cap so the key thing to remember is that it is likely to be more volatile over time. Buying these sorts of companies can mean plenty of upside during their early stages but there can be lots of volatility to get there.”
However, this strategy has not translated into meaningful gains since Brodie has been at the helm of the fund, a relatively short period of time, and the trust is in fact down almost five per cent.
Performance of trusts, sector and index since 27 January 2014
Source: FE Analytics
By comparison Scottish Mortgage is up 23.17 per cent over this period while the average trust in IT Global sector made 5.89 per cent and the FTSE All World index gained 11.29 per cent.
Cade says this should not agitate longer-term investors and could be treated as a buying opportunity.
“It has not been an outstanding start since changing its mandate at the beginning of the year but if you are looking on a medium-term horizon it is at an attractive entry point,” Cade said.
“When this has happened in this sort of trust it is usually a good time to buy, as long as you believe in the management and can take a bit of volatility. You can see the discount narrowing over time as well.”
Cade says some of the falls can be accounted for by a few stocks that have had a rough ride over the course of the year, particularly following a mid-cap dominated sell in March.
“It has had companies such as ASOS and Ocado, which have seen their ratings move pretty quickly,” Cade explained.
Ocado, which represented 3.1 per cent of trust in March, its second largest holding at the time, has disappeared out of the top 10 having lost nearly 30 per cent since the beginning of the year while ASOS is down almost 60 per cent.
Performance of stocks and index in 2014
Source: FE Analytics
Its largest holdings include IP Group, Tesla Motors, Zillow and Alnylam Pharmaceuticals.
Gearing in the trust is currently at 9 per cent while Scottish Mortgage is 13 per cent geared. The trust is more expensive than Scottish Mortgage with an ongoing charges figure of 0.99 per cent compared to 0.5 per cent for the larger trust.