In the discussion we had with the manager we felt this fund had a clear point of difference. The argument is that many small cap businesses will remain so. What they are looking for are those ‘immature’ businesses which have the potential to move up the scale.
For new investors choosing the right sector or country can be daunting. Often they are drawn to the best performers, and those being advertised. This strategy can work but the reverse is also true with investors being disappointed because they haven’t fully understood the strategy.
We recently met one of the managers behind the Baillie Gifford Global Discovery Fund; the fund draws on the regional teams from the UK, Japan, Europe, US and Emerging markets to produce a best of breed global fund.
Its focus is on small cap companies but looking for those that will get bigger in the future. It means the fund is weighted towards such areas as information technology (36%) and healthcare (18.8%).
For investors looking to invest globally in the large cap businesses of the future then this fund could appeal. However, the nature of the businesses they invest in means that this fund will be volatile and has to be seen as a long term investment.
Over five years it has returned nearly 200%; our question for the manager is whether this can be repeated and this review provides an insight into this.