Baillie Gifford's director of marketing and distribution, James Budden, talks to Jayna Rana about taking a joint approach to open- and closed-ended funds and why the group has launched a campaign calling out firms it believes are 'dragging down the industry'
Edinburgh-based Baillie Gifford is unique to most of its peers in that it is wholly independent, owned by its 44 partners. It started as a law firm when it was founded in 1908 before switching its emphasis to investment, growing to the £196bn in assets under management it has today.
James Budden, director of marketing and distribution, has worked for the firm for the past ten years, during which he has been tasked with broadening its retail offering and, as a result, the firm has emerged as one of the key players in this area; every one of its products has posted positive returns over three, five and ten years to 16 November, according to FE.
"Our managers have done well since the financial crisis and our way of growth investing has proven successful," Budden says.
"As we have become better known and our approach more widely understood, people are starting to notice us as a good active investment manager across a range of asset classes and regions."
One of the areas the firm is particularly well-known for is its closed-ended business, as it houses the £7bn Scottish Mortgage - the AIC's biggest and arguably most popular listed equity trust, as well as the £1.7bn Monks trust and its strong Japan offering with AUM
Eight of its nine trusts currently trade on premiums, with UK Growth (which was handed to Baillie Gifford in March having previously been managed by Schroders) on track to follow suit.
"As we have become better known and our approach more widely understood, people are starting to notice us as a good active investment manager across a range of asset classes and regions"
The firm also recently overtook J.P. Morgan as the biggest investment trust provider in the UK by market capitalisation and revealed plans to boost its trust marketing among the IFA community to Investment Week earlier this month.
Budden says: "It is easy to look at trusts as cash cows. You do not need to look after them much but we see them as a businesses you can grow, as you can with OEICs. That is why we do not compare the two and take a joint approach with sales and marketing.
"As we venture into the advisory space, we would like to start by talking about Scottish Mortgage, which many see as not only a trust of choice but a global fund of choice. There is no reason why it should not move out into the wider world.
"The trust industry should not be seen as some kind of alternatives sector, and all products should be judged on suitability and performance rather than structure."
Some gaps in Baillie Gifford's trust range still remain as it currently lacks European and multi-asset offerings, which Budden says the firm is keen to address in the future, but most trusts sit alongside open-ended counterparts, which he says is "a strength rather than a competitive issue as it allows for good investment proposition and perspective".
He adds: "After the Japan crash, we kept going with our funds even when other groups got rid of theirs, largely thanks to the stability of our two Japan trusts. Even when an area is out of favour, trusts do not get hammered by redemptions like OEICs."
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Joined the business in 2015
Lars Dollmann also stepping down
Two investment specialists joining Edinburgh team
'Will remain an independent business'