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Baillie Gifford growth fund defies corona crisis
Tesla’s strongest single investment
We are also looking for new trendsetters
As “Bloomberg” reports, citing data from Morningstar, a global growth fund managed by Mark Urquhart was able to achieve an increase of 72 percent in the first three quarters of 2020 despite the Corona crisis. For comparison: UK growth funds achieved an average performance of 14.9 percent. Two more funds from the Scottish investment management company Baillie Gifford, for which Mark Urquhart also works, landed in second and third place, with growth of over 56 and 52 percent respectively.
Performance driver: Tesla
All three Baillie Gifford funds have one thing in common: their largest single investment is Tesla. This paid off, because Tesla shares have increased by over 400 percent in the year to date.
Urquhart’s fund was only launched in 2017, but Baillie Gifford has been using Tesla since the beginning of 2013. At the time, the share was still trading for less than 10 dollars, now – despite a 5: 1 stock split – it is already over 400 dollars. That the company can be found despite the controversy surrounding the charismatic but sometimes eccentric CEO Elon Musk the loyalty has now paid off.
Musk has “almost single-handedly converted an entire industry,” said Urquhart, who runs a Model S himself, praised the Tesla boss in an interview. “He has flaws, like all of us, but he is more in the public eye,” defended the mutual fund manager Musk’s antics.
Long-term Tesla commitment
As a growth investor, Baillie Gifford relies on companies that are expected to grow strongly and has a long-term commitment. And while this increases the risk, large holdings are sometimes acquired. Tesla alone accounts for 10.7 percent (as of the end of August) in Urquhart’s fund.
At times, Baillie Gifford was even the second Tesla shareholder after Elon Musk himself. But now it is only fourth because the rising share price recently forced the investment management company to sell some Tesla shares in order to sell the shares in the U.K. to comply with the legally prescribed limits for a single investment. Beyond that, Baillie Gifford has no intention of reaping her Tesla winnings.
New trends in sight
Urquhart’s top 10 also include established names such as Alibaba, Amazon and Facebook. However, he also acquires shares in younger companies that are at the forefront of social change.
These include, among others Beyond Meat, which are right at the forefront of the hype about plant-based meat alternatives. There is also the video conferencing provider Zoom, which is benefiting greatly from the increasing home office trend, and Peloton, which, as a provider of exercise bikes with online fitness programs, is also benefiting enormously from the stay-at-home trend.
Finanzen.net editorial team
Image Sources: Marco Destefanis / Pacific Press / LightRocket via G., David Calvert / For The Washington Post via Getty