Short Briefings on Long Term Thinking - Baillie Gifford

Alice Stretch, an investment manager with Baillie Gifford’s Emerging Markets Equity Team, dives into the world of innovative companies in Asia and Latin America. She discusses how emerging markets are leapfrogging their Western counterparts, highlighting firms like Pony.ai, which launched robo-taxis during a storm, and E Ink, transforming displays in retail. Stretch showcases disruptors like PolicyBazaar and Nubank, illustrating their ability to thrive without legacy systems. The conversation emphasizes long-term investing potential in these dynamic markets.

Robert Natzler, an investment manager at Baillie Gifford, dives into the vibrant world of private companies. He discusses key investments like Anthropic, an AI lab creating cutting-edge tools, and Revolut, a digital banking powerhouse outpacing traditional banks. Natzler highlights Mottu's innovative support for gig workers in Latin America and Zetwerk's supply chain solutions diversifying manufacturing beyond China. With a focus on global growth equities, he emphasizes the importance of seeking exceptional companies, regardless of location.

Brian Lum, an investment manager at Baillie Gifford specializing in Japanese small caps, shares insights from his new role. He identifies Japan’s smaller companies as a prime growth opportunity, discussing standout firms like Weathernews, which uses AI for weather forecasts, and LITALICO, helping people with disabilities find work. Lum highlights the deep potential within Japan's market, the importance of in-person meetings, and the innovative ways companies integrate AI, making a strong case for why investors should not overlook this sector.

Tim Campbell, CEO and managing partner at Baillie Gifford, shares insights from his extensive career in investment management. He emphasizes the firm’s conviction-led, long-term investment strategy that prioritizes exceptional growth companies over benchmarks. Tim discusses the value of being 'out of step' with market trends and the role of patient clients. He delves into Baillie Gifford’s investments in private companies like AI lab Anthropic and highlights the increasing importance of AI in investment processes, ensuring a shift toward insightful analysis.

Jenny Davis, an investment manager at Baillie Gifford, dives into the hidden power of persistence in business growth. She reveals how inside ownership, such as family stakes and long-term backers, fosters resilience in companies. Using examples like Ryanair and Discovery, she illustrates how effective leadership drives innovation and cost control. Davis also explores the significance of family influence in business success, especially in luxury markets, and discusses the pivotal role of long-term strategies in healthcare with company Demant and its philanthropic backing.

From microloans for farmers to free savings accounts for the ‘unbanked’ to customised insurance for gig workers to a cheaper, faster way for migrants to send money to loved ones: a growing range of services is helping many of the world’s least advantaged citizens increase their financial resilience. Previously, banks and other traditional lending institutions overlooked these customers. But as impact director Ed Whitten explains, by backing the companies now involved, you have an opportunity to improve people’s lives and achieve strong growth. Background:Ed Whitten is an impact director in Baillie Gifford’s Positive Change Strategy. Its dual objective is to provide our clients with attractive returns while contributing to a more inclusive, healthy world. Whitten’s role is to ensure that the companies it holds fulfil the second part of that pledge. In this episode, he explores the topic of financial inclusion, explaining why the companies involved need to do more than simply provide access to loans, insurance and money transfers. Topics include how firms can use data and apps to deliver customised services that address specific people’s needs while protecting them from indebtedness. Whitten also explains how conversations with the companies Positive Change backs can nudge them towards better outcomes, such as providing customers with better financial education. And he explores the importance of helping people gain financial resilience against the effects of climate change and other events that could otherwise devastate their livelihoods. Companies covered include: Nubank – the digital-only bank used by most Brazilian adults that’s also growing in Mexico and Colombia. Grab – the south-east Asian ride-hailing and delivery service that provides loans and insurance to drivers and merchants using its platform. Remitly – the remittance service offering migrants a quick, low-cost and reliable way to transfer money to family and friends. HDFC Bank – the Indian lender expanding its rural branch network to explain face-to-face how its services can put customers on a better financial path. Resources:Case study: MaligaNubank’s Beyond Access studyPositive Conversations 2024The Song of the CellTrip Notes: Brazil (UK version / Ex-UK version) Companies mentioned include:ChimeBank Rakyat IndonesiaGrabHDFC BankMercadoLibreNubankRemitly Timecodes:00:00 Introduction02:05  From the British Army to impact investing03:40  A sustainable, inclusive, healthy world04:25  The different types of financial inclusion05:40  Eyes open to the risks of indebtedness06:45  Volatile repayment rates07:35  Beyond accessibility: the personalisation of products09:05  Partnering with CGAP and other development bodies10:25   Nubank’s Caixinha money boxes12:45   Nubank’s Mexican banking licence14:15   Ensuring growth comes with impact15:20   Grab’s loans and insurance16:40   Grab’s data-driven approach to risk19:45   The fast growth of remittances 21:25   Remitly’s cheaper money transfers22:35  Gaining market share from Western Union23:40  HDFC Bank’s expanding rural branch network24:55  Financial inclusion in advanced economies26:55  The ‘lucrative customers of the future’28:15   Book choice 

Andrew Keiller, a partner at Baillie Gifford and an expert in emerging markets, dives into the transformative shifts reshaping the global economy. He discusses the surging demand for commodities and the explosive growth of the middle class in developing nations. Keiller highlights standout companies like lithium miner SQM and AI chipmaker SK Hynix, which are perfectly positioned to benefit from these trends. The potential of companies like Kazakhstan's super-app, Kaspi.kz, also showcases how digital innovation is revolutionizing the market landscape.

In this discussion, Iain McCombie, a partner at Baillie Gifford and head of UK equity, shares insights on the UK growth landscape. He highlights ambitious companies in advanced manufacturing and digital technologies, like Renishaw and Wayve, navigating tariff challenges. McCombie underscores the importance of adaptability, active investing strategies, and strong fundamentals. He emphasizes the potential within creative industries and fintech, while optimistic about delivering long-term returns despite economic turbulence.

Stephen Paice, a partner at Baillie Gifford and head of European Equities, dives into the undervalued landscape of European stocks. He discusses the potential for significant gains as outdated views shift. Key sectors like biopharmaceuticals, digital platforms such as Spotify, and the booming semiconductor industry are highlighted as ripe for investment. Paice also explores the resilience of certain companies amid trade tariffs, emphasizing the impactful role of culture and leadership in driving growth. His insights reveal a promising future for European innovation and investment.

Investment manager Luke Ward, from Baillie Gifford’s Private Companies Team, discusses transformative technologies shaping our future: quantum computing, reusable rockets, and nuclear fusion. He highlights PsiQuantum's strategy to revolutionize computing through photonics, SpaceX's innovations making space travel affordable, and SHINE Technologies' advancements in nuclear fusion for clean energy. Ward also explores how these breakthroughs could impact agriculture, telecommunications, and medical treatments, providing a thrilling glimpse into engineering's influence on tomorrow.