Subscribe to Baillie Gifford emails for monthly updates directly to your inbox.Subscribe
Baillie Gifford China Growth Trust plc.Watch
A private companies approach to ESG.Read more
Glasgow climate pact: from risk to opportunityRead more
Neither heroes nor villains.Read more
The Monks Investment TrustFind out more
What I’ve learned in four decades of investing
The value of an investment in the fund, and any income from it, can fall as well as rise and investors may not get back the amount invested.
His career spanned big changes in investment – and in the fortunes of Baillie Gifford. Charles Plowden, joint senior partner and manager of Monks Investment Trust, looks at the opportunities ahead
Charles Plowden’s first day at Baillie Gifford is etched on his memory: “I was very keen, and I think I turned up about an hour before I was supposed to, which caused some confusion in reception”.
Little did he know he was embarking on a career with the firm that would last 38 years, not the brief apprenticeship he had in mind.
“I had a masterplan, which was I was going to move to London and work for one of the big merchant banks there. I thought the way to get on there is to have a proper grounding in investment markets,” he recalls. “So, I thought two years as an investment analyst would be the best possible training for advising the titans of industry.”
Charles Plowden, joint senior partner.
Plowden, manager of The Monks Investment Trust and joint manager of Global Alpha Growth Fund, has no regrets over the revised plan, his career having witnessed seismic changes at Baillie Gifford and in the industry generally, an evolution he divides into distinct phases.
“The 1980s and 1990s for us were all about growing into pension funds”, he points out, highlighting expansion in the UK and then North America. “But I think that market taught us some bad habits. It taught us to be quite limited in our ambition, to be very risk averse, never to stray too far from the benchmark or from our peer group. And it encouraged a focus on short-term investment performance, which eventually, we concluded, was detrimental to the clients’ best interests.”
That prompted a revision of Baillie Gifford’s approach, fuelling an ambition to differentiate the firm from other players in the investment market.
“That has actually worked hugely well. Performance over the last 20 years has been on a different level from the previous 20 years, and we’ve done it largely through taking risks, but conscious and well-judged risks. And there’s been, associated with that, big internal changes, which we’ve managed because it’s been a continuous process”, he says with understandable pride.
That brings us to what Plowden describes as a possible third big reset, following the move into pensions then the substantial changes of the early 2000s. He is hopeful that this latest phase is driving a greater purpose in investment.
“We think investment increasingly has an important role to play in terms of allocating capital to the most deserving, beneficial, helpful sectors of industry,” he says.
Looking ahead, Plowden sees the climate crisis as a significant issue, positing the view that investment companies must help to drive change.
“The answer is going to be companies having to come up with the products and implement them, and we think the investment industry has a big role in making sure that the capital goes to the right companies that come up with the solutions,” he says before pointing to Baillie Gifford’s stance. “We think that investment, certainly in our firm, is becoming more purposeful. We’re on a mission, if you like. And we sum it up by what we call Actual Investing, which is focusing on the long term, on supporting the right companies and having a positive impact on broader society.”
Turning to his contribution to Monks which he has managed since 2015, Plowden states, “Over the six years, there has been a shift within the portfolio from more cyclical growth towards more secular growth, so mainly technology-focused, whether healthcare or internet-driven cloud computing. Then, very recently, we’ve begun to consider whether that shift has gone far enough and we should be returning a little bit towards maybe some more cyclical recovery stocks, as we come out of the pandemic.”
Plowden leaves behind an established team, ensuring continuity in the management of Monks and its institutional equivalent, Global Alpha. As he prepares to depart, he reiterates what he sees as his greatest lesson learned: “The single most important thing is that you have to be long-term in both your thoughts and your deeds. And when you’re investing in a company, you have to be confident you’d be happy to own it for five or 10 years and not touch it.”
What’s next? He plans to take a holiday before applying his expertise to help some smaller companies. He may also work on an area of growing importance for him and for the financial sector more broadly.
“I strongly believe that the solution to the environmental crisis will come through new technologies which will need funding. It may be that there’s some role there I could find. Otherwise I will simply read about it and follow it with interest”. The latter seems less likely, as it’s hard to imagine Plowden being content on the sidelines.
Words by Colin Renton
You can hear more of Charles’s thoughts in the Baillie Gifford podcast Short Briefings on Long Term Thinking.
You can listen to the podcast at bailliegifford.com/podcasts
This article contains information on investments which does not constitute independent investment research. Accordingly, it is not subject to the protections afforded to independent research and Baillie Gifford and its staff may have dealt in the investments concerned.
This communication was produced and approved in March 2021 and has not been updated subsequently. It represents views held at the time of writing and may not reflect current thinking.
Investment markets and conditions can change rapidly. The views expressed should not be taken as fact and no reliance should be placed upon these when making investment decisions. They should not be considered as advice or a recommendation to buy, sell or hold a particular investment.
Baillie Gifford & Co Limited is authorised and regulated by the Financial Conduct Authority (FCA). Baillie Gifford & Co Limited is an Authorised Corporate Director of OEICs. The investment trusts managed by Baillie Gifford & Co Limited are listed UK companies.
A Key Information Document for Monks Investment Trust is available at bailliegifford.com
51611 IND WE 1951
YOU MAY ALSO LIKEInsights.Visit Baillie Gifford's Insights page.Wanted – Bond Champions.Yields at low or even negative rates have prompted questions about the relevance of investing in bonds. Phil Annen remains a fan. And he explains why, insisting this is an asset class that can still form a key part of an actively-managed, balanced portfolio and offer attractive returns.Japan’s blossoming range of carbon-cutting solutions.The firms doing pioneering work to produce renewable energy and eco-friendlier transport.Capital Hill On... Orphaned Assets.The first wave of child trust funds will mature later this year, but with £2 billion languishing in unclaimed accounts what can you do to reclaim these and other orphaned assets? Capital Hill reports.