James Anderson, the star stock-picker of the FTSE-100-listed Scottish Mortgage Investment Trust, is to step down as manager of the Baillie Gifford fund after more than two decades in which the fund has delivered investors 1,700% in returns.
Anderson, who has made huge returns for investors by staking early bets on emerging technology companies such Tesla, Amazon and China’s Alibaba, announced on Friday that he would retire in April 2022.
The investment manager, who has made millions from performance management fees, has given a lot of money away to Edinburgh’s Heart of Midlothian football club. The club received more than £11m from benefactors over the past four years. Anderson is understood to have been the biggest contributor.
Anderson, who joined Baillie Gifford in 1983, has been manager of the flagship £18.5bn SMT fund since 2000. He will be replaced by the Baillie Gifford partner Tom Slater, who has been co-manager since 2015. Lawrence Burns, also a partner at Baillie Gifford, will become deputy portfolio manager of the 112-year-old company.
“They are both thoughtful, dedicated and ambitious investors with a willingness to learn and an outstanding ability to partner with great companies,” Anderson said. “I couldn’t be happier than to have them as my successors.”
Anderson, 61, is best known for spotting the potential of the electric car company Tesla, which he started buying heavily for the fund in 2013 when the shares were changing hands at about $6 each. The shares are now changing hands at about $650.
Earlier this year, the Guardian revealed that Baillie Gifford’s investments in Tesla had made $29bn (£21bn) for investors including pension funds, foundations and charities. Anderson also appears to have picked a good time to sell down the Tesla stake. In January SMT nearly halved its weighting in Tesla from 8.9% of the fund to 5.1%. Tesla hit a high of $800 in January, before falling back to $650 following fears that the shares may have been overvalued.
Scottish Mortgage delivered shareholders returns of 110% in 2020, as heavy exposure to US and Chinese tech companies paid off as the coronavirus pandemic benefited tech firms.
Ryan Hughes, the head of active portfolios at the stockbroker AJ Bell, said the news of Anderson’s retirement could cause “some worry” for “thousands of investors who have made fantastic returns over many years”.
“Anderson has helped build Scottish Mortgage into a phenomenal investment trust over many years with his clear, high conviction approach being a driving force behind its willingness to invest in early stage companies and hold them while they become global winners with Amazon, Tesla and Alibaba all being great examples.”
“Since being appointed manager on the trust on 1 April 2000 he has delivered a staggering 1,700% returning, equivalent to turning a £1,000 investment into £18,000 compared to just £4,440 if invested in the FTSE All World benchmark. These returns have propelled the trust into the FTSE 100, remarkably making it the 31st biggest company in the market.”
Matthew Hose, an analyst at Jefferies, said: “It is hard to overstate James’s contribution, having taken SMT from around £1bn of assets in 2000 to its current £17bn, sitting in the FTSE 100.”
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Shares in SMT dropped about 2% to £11.25 on the news of Anderson’s retirement. The share price is up 137% over the past 12 months, despite a 20% drop from a peak of £14 in February.
Fiona McBain, the chair of SMT, said Anderson’s approach of spotting and holding on to “transformational growth companies” had “delivered exceptional returns for shareholders”. “He has also pioneered our investments in private companies, one of the trust’s most important strategic initiatives to date,” she said.
Anderson is to become chairman of the Swedish investment firm Kinnevik, which manages the fortune of Sweden’s wealthy Stenbeck family and other shareholders.