Masters in Business James Anderson on Why Fund Management Is 'Broken' (Podcast)
Feb 11, 2022
James Anderson, a longtime partner at Baillie Gifford & Co. and joint manager of Scottish Mortgage Investment Trust PLC, shares his unconventional views on the fund management industry. He argues it’s 'irretrievably broken' and critiques the short-term thinking prevalent in finance. Anderson identifies traits of explosive growth stocks like Tesla and emphasizes the need for qualitative assessments in disrupted markets. He also reflects on the challenges of European innovation and the importance of mentorship in navigating complex investment landscapes.
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Broken Fund Management
- Fund management has become inward-looking, focused on short-term performance relative to competitors.
- It has shifted from nurturing great companies to a machine for recycling capital through buybacks and dividends.
Spotting Explosive Growth
- Look for companies addressing large markets, even if not obvious initially, with management that embraces open-endedness.
- Seek unique companies with a clear vision, as mediocrity is often homogenous.
Amazon's Weirdness
- James Anderson regrets not investing heavily in Amazon sooner, despite recognizing Jeff Bezos's unique vision in 1997.
- He highlights Bezos's observation about the "weirdness" of his business model: everything got better and cheaper.
