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Introduction
In an era of unprecedented technological and social change, a traditional approach to investment analysis – rooted in financial metrics and equity market dynamics – is increasingly insufficient to capture the full scope of transformative growth opportunities.
The most profound insights into how our world is evolving often emerge from the laboratories, research institutions, and innovative companies reshaping society's fundamental fabric. At Baillie Gifford, we place great emphasis on conversations with authors, industry experts and academics who can help us develop our view of the world and how it is changing.
Personifying this approach, our International Concentrated Growth strategy team embedded external engagement and challenge into its core philosophy and process. The strategy engages external reviews of the portfolio to bring fresh perspectives from leading thinkers outside the financial industry.
The value of these external perspectives lies not just in their ability to challenge our thinking, but in their capacity to illuminate emerging trends and structural changes that may not be immediately apparent – a crucial input for identifying and investing in the innovative growth companies of tomorrow.
Since inception, our external reviewers have included the likes of the Copenhagen Future Studies Institute, Professor Brian Arthur from the Santa Fe Institute, and most recently Dan Wang from Yale Law School's Paul Tsai China Centre. Each has brought distinct perspectives - from megatrend analysis to complex systems thinking to geopolitical insights.
As a direct result of Baillie Gifford’s partnership structure, we can commit time and resources to nurturing these external collaborations. We ask only what people are interested in, not for the answer to a specific question. Given the uncertainty as to when and what value these engagements will yield, they would only be viewed as a cost elsewhere. We view them as a valuable investment.
Below, we share a summary of recent reviewers’ insight and how they have helped broaden our thinking.
Megatrends – The Institute for Future Studies
Overview: The Future Studies Institute's review employed a megatrend framework to analyse the portfolio, focusing on long-term drivers of change such as advanced computing, demographic shifts, and the commercial opportunities associated with space travel.
Bottom-up meets top-down
In 2017, we marked a significant milestone in our International Concentrated Growth strategy by conducting our first formal external review. This approach proved incredibly valuable, reinforcing our commitment to making this an annual exercise.
The review process highlighted some fascinating contrasts in investment philosophy. While the Future Studies Institute approached the portfolio through a “megatrend” framework - examining top-down, long-term drivers like advanced computing, demographic shifts, and space commercialisation - our traditional strength lies in bottom-up, company-specific analysis. This intersection of perspectives created a rich dialogue about future opportunities and potential blind spots in our portfolio.
Particularly interesting was the Institute's focus on commercial space travel as a key megatrend. While we share their excitement about the transformative potential of space technology and exploration, we've maintained our disciplined approach to finding high-quality, investable opportunities - a reminder that identifying exciting themes doesn't always translate into compelling investment opportunities.
Perhaps most importantly, this exercise validated our belief that the most valuable insights often come from outside the financial markets. The type of wide-ranging conversation possible with non-market participants is much more attuned to our long-term style of investing. While we'll continue to emphasise our bottom-up, management-focused approach, the addition of an external perspective helps us remain open-minded and forward-thinking in our investment process.
The Copenhagen Institute for Futures Studies is an independent, non-profit think tank.
The artificial intelligence revolution - Brian Arthur
Overview: Prof. Arthur's review focused on the transformative potential of Artificial Intelligence, which he considered the most significant invention since the printing press. This may seem obvious today, but at the time, it was far from apparent.
AI as a fundamental force
In 2018, during our review with Professor Brian Arthur, he made a bold claim that Artificial Intelligence (AI) would be as transformative as the printing press. At the time, this comparison seemed ambitious - after all, the printing press had catalysed the Renaissance, Reformation, and the Scientific Revolution. Looking back from 2025, his foresight seems remarkable. Just as the printing press democratised knowledge, AI is today externalising intelligence itself. What seemed like an abstract concept has become a tangible reality, with AI embedding itself in virtually every sector of the global economy.
This engagement also prompted us to evolve our investment framework to evaluate both the opportunities and risks presented by AI across our portfolio holdings. This dual lens has proved crucial - while AI has driven unprecedented innovation and efficiency gains, it has also raised important questions about job displacement, wealth distribution, and social equity that we must consider in our investment decisions. It also demonstrated the value of a mosaic approach to research. Our conversation with Prof. Arthur was informed by, and benefitted from, other engagements with AI companies, management of portfolio holdings, and respected industry leaders.
What's particularly striking is how capabilities we are beginning to take for granted - like large language models, autonomous systems, and AI-driven drug discovery - were barely conceivable only a few years ago. Yet, as we look ahead today, it's clear that the AI journey for the world has only just begun. Like the printing press before it, AI's full transformative potential may take decades to fully unfold.
Prof. Arthur is an economist and External Faculty Member at the Santa Fe Institute, IBM Faculty Fellow, and Visiting Researcher in the Intelligent Systems Lab at PARC.
Navigating a new world order – Dan Wang
Overview: We engaged Dan Wang from Yale Law School's Paul Tsai China Center to examine our portfolio through the lens of his expertise in Sino-American relations and the technology sector.
The new reality of deglobalisation
Dan Wang's review offered crucial insights into the current investment landscape. The US government's approach to sanctions and tariffs has evolved significantly since 2016, creating a new paradigm that's unlikely to revert to previous low-tariff conditions. While this makes China particularly risky from a macroeconomic perspective, it paradoxically creates opportunities for bottom-up investors, interested in only a few special companies.
The Chinese regulatory environment continues to evolve under the "common prosperity" doctrine. While there are signs of loosening in some areas, the government maintains its focus on controlling capital expansion. This environment may benefit incumbent companies that successfully navigate regulations, though understanding CCP motivations remains challenging due to the often-opaque domestic environment.
As China re-emerges on the world stage, all investors need to understand and respect these dynamics, regardless of their direct exposure to Chinese equities. The interconnected nature of global markets, supply chains, and technology development means China's evolution will impact investment opportunities worldwide.
Dan Wang is a Fellow at Yale Law School’s Paul Tsai China Center and a leading international expert on China’s technological capabilities.
The Myth of Mean Reversion - Ole Peters
Overview: Prof. Peters provided a critical examination of traditional economic models and their limitations in understanding modern market dynamics. His work on non-ergodicity economics challenged fundamental assumptions about wealth distribution and market behaviour.
Challenging traditional economics
Investment markets are more complex and less predictable than traditional economic models suggest. Traditional economic thinking assumes markets naturally balance themselves and successful companies eventually return to average performance levels. However, mathematical models demonstrate this isn't necessarily true. Instead, we're seeing a world where success often builds upon itself, creating a "winner-take-most" dynamic. This helps explain why some technology companies have become so dominant in their sectors.
Prof. Peter’s insights also highlighted shifting trends in wealth distribution. Rather than wealth naturally flowing from rich to poor through market forces, data suggests the opposite is happening - wealth is increasingly concentrating among fewer individuals and companies. This trend has important implications for investors, suggesting that successful companies may be more likely to continue outperforming rather than reverting to average performance.
These challenges are also creating pressure for new business models, particularly in areas like clean technology and digital innovation. We also discussed potential disruption in traditional industries that have historically profited from controlling access to information or services, such as academic publishing and financial services. This aligned with our broader perspective, which emphasises Schumpeter's model of creative destruction, where we see established monopolies being challenged by new, more efficient business models and technologies.
This understanding has had profound implications for how we manage position sizes. In a world with negative redistribution, traditional approaches to trimming winners should be reconsidered.
Prof. Ole Peters is a physicist and the program lead for ergodicity economics at the London Mathematical Laboratory
Ethics and Technology - Jeroen van den Hoven
Overview: Prof. van den Hoven brought a unique perspective on the moral dimensions of technological advancement. His review emphasised how ethics and sustainability are not merely fashionable concerns but fundamental to understanding human behaviour and economic systems.
Trust as a Competitive Advantage
Traditional economic theories based on pure rationality are increasingly inadequate. Companies that acknowledge and incorporate ethical considerations, especially those with longer-term horizons, may have truly durable competitive advantages.
Professor van den Hoven's review brought insights into the moral dimensions of technological advancement. He emphasised that trust is fundamental to business success, particularly in technology companies. It's insufficient for companies to merely demonstrate business competence; they must also prove they can use that competence appropriately. But he also acknowledged that the eventual shake-out of businesses or countries can take decades, putting the subject beyond the scope of most investors.
This also applies to countries, according to Prof. van den Hoven. We discussed China, where he wondered whether increasing use of surveillance technology is enough to suppress potential dissent in the long run. He agreed that this may be beyond even our long-term time horizon, although his contrarian take was a helpful challenge to our view of the potential of transformative Chinese companies at the time.
Professor Jeroen van den Hoven is an expert in Ethics and Technology at Delft University of Technology.
Broadening our perspective
Looking for insight beyond the traditional confines of the financial market is critical to how we invest. As we look forward, we remain committed to our process of external engagement and challenge, recognising it as a crucial element in generating returns for our clients.
In a world where the boundaries of possibility keep expanding, our long-term investment horizon provides us with a unique opportunity to look beyond short-term noise and focus on the fundamental forces driving value creation.
Risk factors
This communication was produced and approved in February 2025 and has not been updated subsequently. It represents views held at the time and may not reflect current thinking.
The views expressed should not be considered as advice or a recommendation to buy, sell or hold a particular investment. They reflect opinion and should not be taken as statements of fact nor should any reliance be placed on them when making investment decisions.
This communication contains information on investments which does not constitute independent research. Accordingly, it is not subject to the protections afforded to independent research, but is classified as advertising under Art 68 of the Financial Services Act (‘FinSA’) and Baillie Gifford and its staff may have dealt in the investments concerned.
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