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Market backs Scottish Mortgage IT as manager announces step down

21 March 2021

The investment market has backed Scottish Mortgage Investment Trust following the announcement that co-manager James Anderson will step down.

Anderson, partner at Baillie Gifford, announced on Friday that he will retire from the firm in April next year after nearly four decades.

Anderson, who joined the firm in 1983 and became partner four years later, will pass management of the £16 billion Scottish Mortgage IT to co-manager Tom Slater.

Slater will be joined by Lawrence Burns as deputy manager with immediate effect.

Adrian Lowcock, head of personal investing at Willis Owen, commented: “James Anderson’s plan to retire will obviously come as a disappointment to many investors who have benefited from some strong performance in the funds he manages. His unique views on companies and markets will definitely be missed.

“However, Baillie Gifford has built a strong culture and investment philosophy which runs through the whole business, so Anderson’s departure is unlikely to have a significant impact. The handover is clearly well planned, and the early announcement gives investors plenty of time to review their holdings and make informed decisions.”

Since taking up the position of manager of Scottish Mortgage in April 2000, Anderson has delivered a 1,700% return, the equivalent of turning a £1,000 investment into £18,000, compared to £4,440 if invested in the FTSE All World Benchmark. These returns helped to propel the trust into the FTSE 100, making it the 31st biggest company in the market.

Nick Wood, fund expert at Quilter, said that while Anderson’s departure will be “unsettling” for some investors, Slater’s heavy involvement since 2015 and Baillie Gifford’s “strong and broad” analyst team should offer reassurance.

Wood said: “Baillie Gifford has a good track record of managing departures like this. We saw a similar transition in its Japan team, with the retirement of Sarah Whitley 3 years ago. This has not resulted in weaker performance so there is at least precedent to go off.

“Baillie Gifford have clearly been hugely successful across a number of regional products, and I would argue it is the process and philosophy behind the organisation which breeds success, although clearly Anderson’s departure will be a loss of experience.”

Ryan Hughes, head of active portfolios at AJ Bell, echoed the sentiment: “It’s important to remember how Baillie Gifford work with the investment process being firmly embedded in the team-based approach and experienced investor Tom Slater remaining at the helm. With Anderson not stepping back for over a year, this has been well planned with a clear handover process for Lawrence Burns to become deputy manager on the trust to support Slater.

“For investors, while this announcement may be unsettling, the strength of the team-based approach, long handover period and continuity through Tom Slater shouldn’t result in major concerns. Slater has worked at Baillie Gifford for over 20 years and been a manager on the trust for the last 10 years ensuring that he knows the portfolio inside out. As a result, I expect no change to the approach which should hopefully give investors reassurance that the investment process will remain intact.”

Darius McDermott, managing director of FundCalibre, added: “Despite the news of James Anderson’s retirement next year, we see no reason to remove our Elite Rating on the Scottish Mortgage Investment Trust. The way Baillie Gifford runs its business is by having co-managers on all of its products, putting it in a strong position for succession planning.

“The trust is run on a team-based approach and has a well-defined investment philosophy focusing on secular growth – none of which is likely to change. We’d like to wish James all the best in the future and congratulate him on a great career, having produced stellar returns on this trust in the past two decades.”

Professional Paraplanner