If history bothers to remember big-name fund managers, two will stand out from the latest generation. The first is Neil Woodford, who will mostly be remembered for losing an awful lot of people an awful lot of money. Anyone who invested in his Woodford Equity Income fund at launch will have lost just over 20% of their money. Anyone unlucky enough to invest at its peak in 2017, when the fund was managing more than £10bn, will be down over 40%. Miserable.
The second is Baillie Gifford’s James Anderson, who will mostly be remembered for making an awful lot of people an awful lot of money. In 2000, he took over management of the Scottish Mortgage investment trust. Since then it has returned 1,530%. The MSCI World has barely managed 270%. How? Anderson bet big on a better future – buying stakes in hugely innovative growth businesses, often long before they went public (the first was Alibaba in 2012) and doing so with conviction. The trust’s top ten holdings tend to make up around 50% of its total assets. This worked – partly because he is an exceptional stock picker and partly because the low interest rate environment of recent decades has proved a tailwind for growth stocks (if you can’t get much income elsewhere, the opportunity cost of holding shares in companies that use their cash to grow rather than pay dividends is low), as has the pandemic. The result? We love Anderson – Scottish Mortgage has been the main driver of the outperformance of MoneyWeek’s investment trust portfolio. So does everybody else – he is “a true visionary” says the head of fund research at Interactive Investor.
If you were feeling uncommonly kind, you could say the difference between Woodford and Anderson has been as much a matter of style as anything else – the former made his reputation as a value investor, and value has long been nastily out of fashion. Anyone who had money with Woodford or who has followed his story is unlikely to feel that kind (the downfall of Woodford Investment Management was as much about terrible governance and style confusion as anything else). That said, style does matter. And now might be a good time to ask if Scottish Mortgage’s high-conviction growth style is still one we want to own. Inflation is probably on the way. Bond yields have been rising. The prices of the kind of stocks Scottish Mortgage likes are very high – and tech has been struggling. At one point this year, Scottish Mortgage was 28% off its peak. So, with the news that Anderson is soon to retire, do we keep it?
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
We do. Tom Slater – currently Anderson’s co-manager – is very good. Baillie Gifford has a strong team offering support, and odds are that whatever the wobbles, the portfolio has enough brilliance in it to outperform long term. Analysts may not be lining up to call whoever is in charge in 13 years a “true visionary”, but I’m pretty sure they won’t be suing either (there are various Woodford-related court cases on the go)! All that the retirement might prompt you to do is to rebalance a bit. If you haven’t sold any for a while it may now make up a large part of your portfolio. That’s fantastic in some ways (you made money!). It’s terrible in others (if it goes wrong you’ll lose a lot of money!). So do diversify. Your investments are there to help you to improve your long-term quality of life. If any one of them keeps you up at night more than very occasionally, something has gone wrong
-
Protests erupt in Turkey after the arrest of Erdogan's rivalTurkey's president has jailed his main political opponent, Ekrem Imamoglu
-
Why is Mar-a-Lago Accord getting attention from Wall Street?On Wall Street, there is talk that Trump's tariffs aim to make the world’s leaders come crawling to Mar-a-Lago, his Florida residence
-
Large cap stocks start to struggle – is it time for investors to reassess their focus?Buying quality large caps worked very well last decade. A more volatile world will be a bigger challenge for these star stocks, says Cris Sholto Heaton
-
How to generate income with fixed-interest investmentsPublic debt is overvalued, but other fixed-interest investments now look like a bargain, says Max King
-
Three top-notch Taiwanese companies cashing in on the advent of AIOpinion Eric Chan, investment director and co-manager of the Aberdeen Asian Income Fund, highlights three potential Taiwanese winners in the technology industry
-
Weight-loss drugs could revolutionise the economy – the investments to buy nowThe new generation of weight-loss drugs are a boon for the overweight, but they also promise to change our relationship with food and revolutionise the economy
-
Find tomorrow’s Asian giants while they are still smaller companiesOpinion Nitin Bajaj, portfolio manager of the Fidelity Asian Values trust, picks three Asian companies to invest in.
-
AI will maintain Moody’s market lead, says Stephen ConnollyOpinion Veteran data provider Moody's has adapted well to the modern world, and is one of Warren Buffett’s longest-held investments
-
Is BlackRock World Mining gearing for a recovery?Opinion After a frustrating year, BlackRock World Mining is positioned for growth and to capitalise on the sector's recovery
-
Should you limit exposure to US tech stocks?An end to the AI boom would shake both US funds and global trackers. Here’s one way to trim exposure to US tech stocks
