Scottish Mortgage has retained its place on Interactive Investor’s ‘Super 60’ rated list despite the impending retirement of star manager James Anderson.
The £17bn trust, which is listed as an ‘Adventurous’ option in the global equities category on II’s best buy list, was placed under review on 19 March after Baillie Gifford announced Anderson will leave the firm and step down as co-manager of the trust on 30 April 2022.
Scottish Mortgage co-manager Tom Slater will continue to run the trust alongside newcomer Lawrence Burns who was promoted to deputy manager last month in anticipation of Anderson’s retirement.
Anderson has worked for Baillie Gifford for nearly four decades, managing Scottish Mortgage for the last 21 years. Over five years, the trust has returned 366%, compared to the IT Global average of 108%.
See also: Investors mull future of Scottish Mortgage without James Anderson
Though II head of funds research Dzmitry Lipski said Anderson had been the “mastermind” behind Scottish Mortgage, he said that after reviewing the situation the platform group had been reassured the investment philosophy of the trust would remain unchanged and the team will continue to follow the same investment process.
New managers have ‘complementary’ experience with global mandates and private companies
Though Lipski admitted incoming deputy manager Burns “may be new to many shareholders” he said he is “an experienced manager at the firm and an ideal fit for Scottish Mortgage”.
“Lawrence is philosophically aligned with the trust: his investment focus is on transformative growth companies and he has co-managed some of our largest international strategies alongside James.”
Lipski added that Slater and Burns should work well together as a team given their “complementary” experience. Both managers run global mandates at Baillie Gifford and invest in private companies, which has increasingly become an area of focus for Scottish Mortgage.
Lipski said: “James Anderson has been indeed a key person that has contributed a lot to the trust’s phenomenal performance by investing in early-stage future global winners such as Alibaba, Amazon and Tesla.
“However, he will remain with the team for another year and will hand the lead management responsibilities to the experienced investor Tom Slater with whom he has been working with for a long time. This is a clear sign for well-planned transition with the appointment of Lawrence Burns as a deputy manager definitely adding more expertise.”
Andrew Telfer, joint senior partner of Baillie Gifford, said on the announcement of Anderson’s retirement that Baillie Gifford’s transition process is “tried and tested over generations” and that they have “developed talented successors in each of Jame’s teams in recent years”.
Scottish Mortgage’s shares have been rattled this year after fears of rising inflation sparked a rotation back to value stocks. In March it was trading at an 11% discount but this has since narrowed to 2.3% thanks to a rebound in growth stocks and board-initiated share buybacks.
According to Trustnet, it lost 2% over 3 months while the IT Global sector returned 3.1% but it has returned 9.1% over the last month compared to peers’ 5.6% average.
See also: Will Baillie Gifford avoid the major handover pitfalls as James Anderson departs?
