Actual investors emphasise what might go right. Not wrong.

What counts as a mistake in investment? For Actual investors, often the biggest cause for regret is looking at a company and failing to imagine how it could grow into a world-beating enterprise.

One such error occurred in 2009 when Baillie Gifford considered investing in Netflix but passed up on the grounds that it probably wasn’t a very exciting business. Thankfully, by 2015, we had realised our mistake and did invest in time to generate strong returns for our clients.

As for the times when hopes and expectations about a company we’ve invested in don’t materialise, we don’t necessarily see them as wrong decisions. Sometimes, things just don’t turn out as we thought they would and fretting about unforeseeable events can be a distraction from looking for the next potential winners. The important question is whether we should have made a different decision based on the information we had at the time, and if so, what we can learn from that. One thing we know for sure is that waiting until there is no uncertainty associated with an investment is a surefire way of being late to the opportunity.

Understanding and embracing asymmetry is key. No investment we make can lose more than the money we put into it, whereas we can make many times our original investment on behalf of our clients. To do so requires patience and alignment of goals between management and investors. It requires imagining ‘what more could happen from here?’. It means ignoring the inevitable steep drops in share price that almost all long-term winners experience along the way. Perhaps most importantly, it needs clients who entrust us with their money to manage to be resilient to short-term volatility and focus on the long term, as we do.

This house style of ‘running our winners’ is not unique to Baillie Gifford, but it is one that has, in recent years, gained academic credibility. In a study we commissioned of global stock market returns between 1990 and 2018, University of Arizona scholar Professor Hendrik Bessembinder established that the top 1 per cent of all listed equities globally combined to account for the total net gain in stock markets. That is, 61 per cent lost money for the whole period they were available as investments; 38 per cent collectively offset those losses, and the best-performing 1 per cent accounted for an amount equivalent to the entire net gain. Some might say that this is an argument for passive management. We would say it’s why Actual investors need to focus on the relatively small number of companies that have long-term compounding capabilities and management ambition to match.

Please remember that all investment strategies have the potential for profit and loss and your or your clients’ capital may be at risk.
 
The information on this Website is issued by Baillie Gifford Asia (Hong Kong) Limited 柏基亞洲(香港)有限公司 (the “Company”) which is licensed by the Securities and Futures Commission of Hong Kong (the “SFC”) under the Securities and Futures Ordinance (“SFO”) for Type 1 (Dealing in Securities) regulated activity with CE Number BGB803. It allows the Company to market and distribute the Baillie Gifford’s range of collective investment schemes to Professional Investors (as defined by the SFO) in Hong Kong.
 
The information contained in this website has been compiled with considerable care to ensure its accuracy at the date of publication. However, no representation or warranty, express or implied, is made to its accuracy or completeness. Nothing in this information or elsewhere in this website shall exclude, limit or restrict our duties and liabilities to you under the SFO or any conduct of business rules which we are bound to comply with. The information on this website has not been reviewed by the SFC. These Terms and any non-contractual obligations arising from or connected with them shall be governed by, and these Terms shall be construed in accordance with, the laws of Hong Kong.
 
This website is informative only and the information provided should not be considered as investment or other advice or a recommendation or offer to buy, sell or hold a particular investment. You can read details of our Legal and Important Information here. Please remember that all investment strategies have the potential for profit and loss and your or your clients’ capital may be at risk.
 
This website does not collect personal information. "Cookies" may be stored on your computer for easy navigation. A "cookie" does not allow us to identify you, but stores information about navigation through our website (such as pages already visited, time and date of visit) which we can remember during the user's next visit to our website in order to improve your browsing experience. If you have any enquiries in relation to our data protection policies and procedures, this Website or the information on it, please click here to contact Baillie Gifford.
 
Baillie Gifford Asia (Hong Kong) Limited 柏基亞洲(香港)有限公司 is incorporated in Hong Kong.  The Company’s principal place of business is Suites 2713-2715 Two International Finance Centre, 8 Finance Street, Central, Hong Kong . Baillie Gifford Asia (Hong Kong) Limited 柏基亞洲(香港)有限公司 is a wholly owned subsidiary of Baillie Gifford Overseas Limited, which is wholly owned by Baillie Gifford & Co. Baillie Gifford Overseas Limited and Baillie Gifford & Co are authorised and regulated in the UK by the Financial Conduct Authority.

Any stock examples, or images, used on this website are not intended to represent recommendations to buy or sell, neither is it implied that they will prove profitable in the future. It is not known whether they will feature in any future portfolio produced by us.