Finding hidden value in American markets

American large-cap fund managers who consistently beat the index are few and far between. Mick Brewis at Baillie Gifford's American Fund is one of them. His fund has outperformed the S&P 500 index by an average of 2.4% each year for the past decade, putting it in the top ten in its sector. A return of 38.7% over five years comfortably beats an IMA North America sector average of 20.6%, based on Morningstar data.

So, what's his secret? "Wall Street's big weakness is short-termism and an obsession with quarterly results," Brewis tells This is Money. Instead, his 41-stock fund takes a bottom-up, long-term view, looking for firms with "hidden value" and holding stocks for between three and five years. The fund's 30% a year stockturnover rate is well below the 100%-plus level at the New York Stock Exchange. Being based in Edinburgh has its benefits too. "Distance from the markets can lend a perspective."

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To stay ahead of the pack, Brewis says his fund will never be a "closet index hugger". He looks for opportunities others have missed or underpriced. "This could mean searching for under-appreciated growth in earnings, a management turnaround, or an upswing in secular growth."

Contact: 0800-917 2112.

Baillie Gifford AmericanFund top ten holdings

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Apple	8.1%
eBay	4.6%
F5 Networks	4.3%
Home Depot	4.3%
Progressive Corporation	3.8%
O'Reilly Automotive	3.7
Bed Bath & Beyond	3.6
Exxon Mobil	3.4
Brown Forman Corp	3.2
Monsanto	3.2

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