Baillie Gifford has launched an international campaign based on the concept of ‘actual’ investing.
The Scottish-based asset manager believes it is time for the fund management industry to return to its fundamental purpose. By definition, this is to deploy cash into tangible sustainable activities and allow firms to grow and prosper over the long term, while still generating positive returns.
Baillie Gifford stressed ‘actual’ investment requires a willingness to be different, to accept uncertainty and the possibility of being wrong.
Ultimately the firm feels investment management should not be all about processing power, trading and speed. Instead it should be about imagination, creativity and working constructively on behalf of clients with entrepreneurs and companies who have greater ideas than our own.
Stuart Dunbar (pictured), who is a partner at the firm, said: ‘Baillie Gifford is an “actual” investor valuing its duty to direct capital into attractive company projects and in so doing, creating wealth that society needs to fund our future obligations, such as investing in technological progress, medical breakthroughs or building better infrastructure.’
Baillie Gifford director of retail marketing and distribution James Budden added: ‘With this international campaign, we are trying to make the point that active investors are not homogeneous. The difficulty for the investing public is to understand what makes a successful active manager.
‘We are challenging them, and the industry, to search for actual investors and discover a category of investment managers that truly believe in the fundamentals of investing and its benefits.’
Baillie Gifford accepts that passive products have their place in terms of on average low cost market access and better after fees results than active managers. However, it does not believe investment decisions can be made on numbers alone using super computers and complex algorithms.
It points out this approach has little to do with the process of targeting and subsequently allocating capital to the innovative companies changing the world.
‘Passive investing has its benefits. Allocating capital with no reference to the underlying uses of that capital is certainly a low-cost way to gain market exposure, but it is not investing, in the purest sense,’ Dunbar said.
‘Similarly, defining active management as being different from an index is to start in the wrong place. This is why most active investors fail to deliver returns that outperform passive investment strategies over the long term.’