James Anderson: innovation is still the key to returns

James Anderson, the man behind the Scottish Mortgage investment trust, tells Merryn Somerset Webb what he’d buy now

James Anderson © Baillie Gifford
James Anderson is one of UK fund management’s biggest names
(Image credit: James Anderson © Baillie Gifford)

James Anderson is one of the biggest names in the UK fund management industry. As the brains behind the intensely growth-orientated strategy that drives many of Baillie Gifford’s well-known funds, and of course the Scottish Mortgage Investment Trust (SMIT), he has made fortunes for many (Baillie Gifford’s staff and clients both). This month he stood down – but before he did, he and I met at the Baillie Gifford offices in Edinburgh to record one last interview.

We start by talking about the changes in the industry over the past 20 years. One of the problems with the industry is the incentive structure – and the “extreme profit” on offer. Fund management has some of the highest profit margins of any sector, thanks in large part to its ad valorem charging structure (charging a percentage of funds invested). Baillie Gifford has been one of the best-behaved firms in the industry when it comes to this – keeping fees relatively low and slashing them as funds grow. But even so, many of its partners have still made what most of us would consider to be vast piles of cash from the business. And even if all its funds were to massively underperform for decades to come from here, more of them would make more very large piles purely on their percentage take on the assets under management.

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Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.