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The value of your investment and any income from it can go down as well as up and as a result your capital may be at risk.
In a time of great uncertainty, staying positive is easier said than done. Amidst the personal and professional challenges we all face, it can be hard to remain optimistic. Our experience of investing for Positive Change tells us that optimism is the only way forward. Our belief in fundamental human progress is what allows us to invest for a brighter future, and aim to deliver attractive investment returns, even in these challenging times.
Optimism is at the core of our Positive Change strategy which invests in around 30 companies whose core products and services address key global challenges. Not only do these businesses help to solve big problems, we believe they can generate attractive investment returns over the long term.
So how are we staying positive? Well, it’s buoyed us up to see the contributions to beating the pandemic from companies we invest in. At a time of great need, they are rising to the challenge.
Moderna is an innovative biotech company whose shares we purchased at IPO in 2018. It set up a rapid response team, worked non-stop to respond to the virus, and has become the first company to start trialling a vaccine, just 42 days after the coronavirus genome was first sequenced. Moderna’s heavy investment in research and development, and its ability to harness new tools such as Artificial intelligence, has enabled this unprecedented speedy progress.
Teladoc, the Telemedicine company, reported a 50 per cent increase in virtual appointments in just one week in March thanks to its ability to provide accessible, affordable and safe consultations to patients. Sysmex, the diagnostics company, has developed an in-vitro diagnostic test for coronavirus (Covid-19), the first to be approved in its home market of Japan. Illumina’s next generation sequencing equipment also allows for virus detection’.
Aside from these companies on the frontline, imagine dealing with this pandemic without the information available on Google, via devices powered by the chips enabled by ASML and TSMC’s relentless focus on more power at a lower cost. Ecolab’s sanitisers, widely used in industrial and institutional settings, will also be playing a role.
It will be the multifaceted contributions of these companies and many more combined that will allow us to beat coronavirus. As we have always said, global challenges are complex and require a holistic mindset.
Maintaining Broad Horizons
Amid the single-issue rolling news coverage, it is all too easy to become blinkered. We are certainly not underestimating the gravity of the current crisis, but we stay focused on broad horizons.
According to Johns Hopkins University, coronavirus has claimed over 70,000 lives at the time of writing. This is an immense tragedy, but sadly not unrivalled: the World Health Organisation estimates that 17.9 million people die each year of cardiovascular disease; in 2016 1.4 million people died of diarrheal diseases (ie poverty); 250,000 additional deaths per year are projected between 2030 and 2050 if we fail to address climate change. The broad set of challenges we set out to address with Positive Change persist, as does our faith in humanity’s ability to address them.
So, our research effort remains diverse, and our zeal to find great companies that can improve the status quo is stronger than ever. In recent weeks our team has continued work on sustainable agriculture, plastics recycling and waste management companies, and medical equipment companies. Our pipeline of ideas remains rich.
Structural Trends and a Silver Lining
We have also been thinking long term. We think there is a chance that this difficult and uncertain time could hasten structural trends we had already foreseen, forcing behavioural changes and allowing novel solutions to present themselves.
Wider technological adoption, which we have long seen as a key enabler of change, has clearly already accelerated. Even the luddites among us are embracing new ways to connect with colleagues, friends and family. We expect we will all be using Zoom more, and long-distance flights less over the next decade.
For the first time in living memory for most of us, we face a serious curtailment of everyday liberties. This serves as a stark reminder that governments cannot control nature, and that a lack of respect for the planet can carry consequences. This may shift the mindset with which we address climate change and allow us to embrace some of the consumption habit shifts required to tackle serious global warming.
At a more abstract, but no less significant, level, the impact of individual actions on the collective is being thrown into sharp focus, and physical distance is ironically prompting a closer community connection for many of us. This could underpin a hastening of the economic shifts we already believe in, away from a model of capitalism that enriches the wealthy, towards one for the benefit of all.
We certainly don’t claim to have all the answers, and it is far too early to draw definitive conclusions, but we remain confident and optimistic that we are invested for the future.
The case for investing for Positive Change is more important and more powerful now than ever.
Important Information and Risk Factors
This article does not constitute, and is not subject to the protections afforded to, independent research. Baillie Gifford and its staff may have dealt in the investments concerned. The views expressed are not statements of fact and should not be considered as advice or a recommendation to buy, sell or hold a particular investment. This article was written and approved in April 2020 and has not been updated subsequently. It represents views held at the time of writing and may not reflect current thinking.
The Fund’s share price can be volatile due to movements in the prices of the underlying holdings and the basis on which the Fund is priced. Investments with exposure to overseas securities can be affected by changing stock market conditions and currency exchange rates.
Baillie Gifford & Co Limited is authorised and regulated by the Financial Conduct Authority. Baillie Gifford & Co Limited is an Authorised Corporate Director of OEICs.
All data is sourced from Baillie Gifford & Co unless otherwise stated.
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