Private Investor Forum 2026: Investing in great growth companies

As with any investment, your capital is at risk.

Scottish Mortgage: finding the 4 percent

In Baillie Gifford’s 2026 spring Private Investor Forum, two of the largest and longest-managed trusts in our range set out their different, in some ways complementary, routes to the goal of outsized returns.

Scottish Mortgage knows that exceptional outcomes are rarely evenly distributed. Prizes don’t go to the average.

Over the last century, Chloé Darling-Stewart, an investment specialist with Scottish Mortgage told the shareholder audience in Edinburgh, just 4 percent of companies drove the entire wealth creation in the US market. That lopsided result is central to Scottish Mortgage’s thinking.

Their purpose, as she framed it, is to identify, own and support the world’s most exceptional growth companies, public and private; to hold them for the long term, and to do so through a liquid and low-cost vehicle. That combination of conviction, access and cost is rare, she said, and can be attributed to five characteristics of Scottish Mortgage:

• seeking outliers
• private company access
• exposure to transformational growth themes
• being globally unconstrained
• long-term history and endurance

Seeking outliers: asymmetry and the price of patience

The ‘4 percent’ matters because equity markets are asymmetric. If you invest in a company and you are wrong, the most you can lose is what you put in. The downside is limited. If you are right, the upside is essentially unlimited: there is no ceiling on success. Losses are capped, gains are not. That asymmetry is one of the most powerful forces in investing, but only if you pair it with two things that are hard to manufacture: conviction and patience.

Scottish Mortgage will not always get it right, and past portfolios contain real errors, but the job is to find and own the outliers: the big bubbles in the four percent.

NVIDIA is the most prominent example of what patience demands. Scottish Mortgage first invested in 2016, when the company still looked like a gaming-chip business with a curious side project in AI. Since then, it has grown over 130 times in value. Yet the more instructive story, Darling-Stewart said, is the journey: multiple drops of more than 10 percent, and at times more than 50 percent.

The pressure to sell when a holding halves is enormous – it is easy to feel foolish or wrong – but selling at those moments interrupts compounding before it can work its quiet magic.

The same pattern shows up across the portfolio: public winners such as Tesla and ASML, businesses Scottish Mortgage first backed privately, then held through IPO and into public markets, such as Spotify or Wise, and private businesses such as SpaceX, one of the biggest drivers of returns over the last decade. They share the same underlying discipline: find exceptional companies early and hold them long enough for the exceptional to unfold.

Private markets: where more of the compounding happens

If the opportunity is concentrated in a small minority of companies, where does Scottish Mortgage find them? Increasingly, it’s before they reach public markets. Companies are staying private for longer: around seven years a decade ago, closer to 11 or 12 years today. Several additional years of growth – often the fastest and most transformative – now happen before most public investors can access it.

The consequence is an explosion in private markets: a dramatic rise in the number of private companies worth over $1bn. For a public-market investor, this means an awful lot of missed opportunity. Scottish Mortgage’s investment trust structure is central to how it responds. Unlike a traditional fund, it is not forced to sell to meet redemptions, which allows it to be genuinely patient through volatility rather than selling at precisely the wrong moment.

Scottish Mortgage has been investing in private companies since 2012 and has deployed around $6.5bn into the asset class. Today, around 35 percent of the portfolio is spread across 41 private companies. In private markets, reputation matters and founders choose their investors. Their reputation as long-term, supportive shareholders can earn them access and, crucially, lets them own companies through the full life cycle – from private markets through IPO and into the public domain – so shareholders can benefit from the full journey of compounding.

Examples include the famous and the not-yet-famous: SpaceX, ByteDance, Anthropic, Databricks, Stripe, Revolut; and businesses like Redwood Materials, recycling end-of-life electronics into EV batteries, or Zipline, delivering critical goods by autonomous drone. The claim was not simply that private access exists, but that Scottish Mortgage offers private-market opportunity with public-market liquidity, and at a cost that few can match.

Transformational growth themes: riding the wave

But access alone is not enough. You still need a lens –  a belief in disruptive innovation and the conviction that change drives growth. The biggest winners tend to harness powerful waves of change: new forms of demand, new science and new technologies. When you stand back from the portfolio, patterns emerge: clusters across AI, healthcare, transport, finance and commerce. These are the results of searching for exceptional companies.

Scottish Mortgage has exposure to the entire AI iceberg, not just the tip. That includes the suppliers of compute power such as TSMC, NVIDIA and ASML and model builders such as Anthropic. But equally interesting are the myriad of potential AI beneficiaries sitting beneath the waterline.

Because AI will not only create AI companies, it will change what great companies in every industry can do. Spotify, Joby, Revolut, Tempus AI and Stripe are not ‘AI companies’ in the traditional sense, but AI’s toolkit could transform their growth trajectories. This makes them part of the transformational AI stack the Trust seeks to own.  

Globally unconstrained: progress can emerge anywhere

Scottish Mortgage is not based on one theme, one industry or one part of the world. It is an investment in global progress in all its forms. Transformative ideas can emerge from anywhere – a semiconductor breakthrough in Taiwan, a payments revolution in Brazil.

New holdings span the US (Anthropic and Figma), the UK (Revolut), and China (CATL, Minimax and RedNote). Chinese lifestyle app RedNote, is a combination of Reddit, Amazon and Instagram. It has more than 100 million daily users. More strikingly, daily searches on RedNote are already more than half that of Baidu’s (sometimes called China’s Google). It offers a window into what the future of the internet might look like – and it is happening in China.

Endurance: time as a genuine edge

Extreme returns and smooth performance are mutually exclusive, a volatile path of progress is the price of exceptional long-term returns.

But Scottish Mortgage’s distinguishing feature is time. The trust has invested for more than a century through two world wars, the Great Depression, the dotcom crash, the global financial crisis and the pandemic. Each episode felt seismic. Each brought instability and fear. Yet staying true to a consistent philosophy of long-term thinking and patient ownership of growth companies has taken conviction rather than luck: the willingness to look wrong in the short term to be right in the long term, and to give holdings the time and support needed to fulfil their potential.

The Monks Investment Trust: bold and balanced growth

Presenting on behalf of Monks, Investment Specialist Richie Vernon joked that the 97-year-old Trust might be described as the yin to Scottish Mortgage’s yang, though the two trusts, he said, are more similar than they are different.

Both are growth-oriented, both are long-term, and both aim to grow shareholder value over the long term. The difference is the journey.

While Scottish Mortgage, he said, is like a Formula One car: high tech, high performance and high speed. Monks, by contrast, is a rally car: still trying to outpace the pack, but able to do well across a range of terrains and conditions. Monks calls this approach “bold and balanced growth investing,” and believes it matters more than ever.

The few that count: casting the net widely

Asymmetry is at the heart: the few matter much more than the many. If you look at an index that captures the investable universe and track the last decade’s returns, £1 would have become around £3. The more interesting point is how those returns were delivered.

Only one in eight companies beat the index. The gap between the average company – which roughly doubles returns – and the outliers was enormous: a 6x return for the minority that outperformed. That is the ‘bold’ element: Monks tries to pick the best, and many companies simply don’t matter.

What is interesting is that the best companies come in many forms. Over the last decade, the best performing companies are a very varied bunch, they range from selling electric cars or insurance to discount stores or oil.

Three growth profiles: building a more consistent stream

According to Vernon, Monks brings order to that diversity with three growth profiles:

• Growth stalwarts: established industry leaders with clear competitive advantages, delivering durable and consistent profit growth (for example, Mastercard).
• Rapid growth: fast-growing disruptors, creating new markets and disrupting old ones (MercadoLibre).
• Cyclical growth: economically sensitive or cycle-exposed businesses with excellent management teams that can steer through difficulty and emerge stronger (Ryanair).

Together, these profiles can provide a more consistent stream of profit growth over the long term. We can balance the portfolio at the margins, not through big, dramatic shifts, but with small changes that tilt towards the companies best positioned for the terrain ahead.

Uncommon understanding: valuation and what the market is missing

“Find the companies that grow very well, and hold on to them” sounds simple in theory, but it's difficult in practice. One reason is that not all great companies make great investments. Often, the difference is valuation: the price you pay.

Monks' process centres on ‘uncommon understanding’: what is it about our view that differs from the market and is not reflected in the price? Sometimes that difference is simple; sometimes it is complicated.

US discount chain Dollar General is a useful example. Over two decades it was a strong growth investment, driven by steady expansion. In 2022 it replaced its chief executive, changed the model and expanded faster; in doing so, it took its eye off the ball. Inventory grew, theft rose, existing store remodelling was neglected; revenues fell and profits plummeted. Todd Vasos returned, and we met him before taking a holding. 

Our view was that not much had to go right for the company to do well: it needed to return to the model that had worked. The market, by contrast, seemed to assume tough times would continue.

Since we invested, the company has returned to steadier expansion, profits are growing strongly, and we expect growth to continue, even if it moderates. This may not be an ‘exceptional company’, but it can be an exceptional investment when expectations are so low.

A changing world: why balance matters

Monks' approach is more relevant because the times are changing. Rising geopolitical tensions, economic uncertainty and rapid technological adoption are coming together, creating a more unpredictable world than the last decade or two.

The Trust is well set to navigate this for three reasons:

• Broad and balanced exposure. One layer is simply variety: rocket companies like SpaceX, drug companies like Royalty Pharma, oil companies like Petrobras, chip companies like NVIDIA, payments companies like Adyen. Their share prices move differently at different times. The second layer is the three growth profiles, which provide a dependable core and allow risk to be taken elsewhere. Together, this gives adaptability: small tilts towards domestic champions amid trade tensions; towards less economically sensitive businesses amid uncertainty; or towards firms least at risk from AI disruption.
• Resilient fundamentals. Monks is higher growth and higher quality than the benchmark: higher margins, lower debt and higher profitability. Those qualities help the portfolio ride out difficult conditions.
• Valuation. The premium investors pay for the Monks portfolio relative to the benchmark is at a 10-year low. In an environment where inflation and interest rates might rise, that implies less valuation risk than in the past.

Structural trends: long-term engines of growth

These features help manage short- and medium-term risks, but more importantly they allow Monks to focus on the long term – aligning the portfolio with how the world may change over the next five to 10 years. Monks managers map the portfolio to nine structural trends, not because they are thematic investors, but because trend exposures are the product of bottom-up opportunities. They will overinvest where they have uncommon understanding.

Three trends stand out.

• “Chips everywhere”: AI is driving a predicted tripling of demand for computing power. We like chokepoints at supply-and-demand bottlenecks. Disco, a small Japanese firm making dicing and grinding equipment, could become more important as chips are stacked and may accrue pricing power. We also like Samsung: as models become more sophisticated, memory becomes more important, and higher memory prices can benefit Samsung’s broader business beyond AI.
• The emerging consumer: over the next five years, 90 percent of new entrants to the middle class are expected to come from the developing world. We like ‘digital champions’ such as Sea Ltd and Nubank, where the market underappreciates how profitable they can be at scale. We also like more traditional brands such as Nippon Paint and Chinese premium liquor brand Kweichow Moutai, where the attraction lies in brand endurance and management’s ability to sustain it.
• Industrial renaissance: alongside the visible digital revolution, the world is back to building things in specific areas. Opportunities include boring infrastructure (with large spending on upgrades), where a company like CRH can benefit; automation, where companies like Keyence can improve manufacturing efficiency; electrification and grid upgrades, where firms like Nexans provide high-voltage cabling; and, reluctantly, defence – where it is not the spending that matters, but what it is spent on, with companies like AeroVironment at the cutting edge.

Vernon concluded with a callback to his starting metaphor: in rocky terrain and inclement weather, the rally car can be the right journey. But you don't have to choose – there is room in the garage, he said, for both the Formula One car and the rally car.

Annual past performance to 31 March each year (%)

Source: Morningstar, FTSE, total return in sterling. *FTSE All-World Index.

Source: Morningstar, FTSE, total return in sterling. *Index: FTSE World Index

Past performance is not a guide to future returns.

Legal notice: MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indexes or any securities or financial products. This report is not approved, endorsed, reviewed or produced by MSCI. None of the MSCI data is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such.

Important information and risks factors

This communication was produced and approved in April 2026 and has not been updated subsequently. It represents views held at the time of writing and may not reflect current thinking.

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.

Baillie Gifford & Co and Baillie Gifford & Co Limited are authorised and regulated by the Financial Conduct Authority (FCA). The investment trusts managed by Baillie Gifford & Co Limited are listed on the London Stock Exchange and are not authorised or regulated by the FCA.

A Key Information Document is available at bailliegifford.com.

The investment trusts managed by Baillie Gifford & Co Limited are listed UK companies. The value of their shares, and any income from them, can fall as well as rise and investors may not get back the amount invested. The specific risks associated with the Scottish Mortgage Investment Trust include:

•  The Trust invests in overseas securities. Changes in the rates of exchange may also cause the value of your investment (and any income it may pay) to go down or up.
• The Trust invests in emerging markets, which includes China, where difficulties with market volatility, political and economic instability including the risk of market shutdown, trading, liquidity, settlement, corporate governance, regulation, legislation and taxation could arise, resulting in a negative impact on the value of your investment.
• Unlisted investments such as private companies, in which the Trust has a significant investment, can increase risk. These assets may be more difficult to sell, so changes in their prices may be greater.
• Values for securities which are difficult to trade such as private companies may not be readily available and there can be no assurance that any value assigned to such securities will accurately reflect the price the Trust might receive upon their sale.
• The Trust is listed on the London Stock Exchange and is not authorised or regulated by the Financial Conduct Authority. The information and opinions expressed are subject to change without notice. This information does not in any way constitute investment advice or an offer or invitation to deal in securities.

The specific risks associated with the Monks Investment Trust include:

• The Trust invests in overseas securities. Changes in the rates of exchange may also cause the value of your investment (and any income it may pay) to go down or up.
•  The Trust invests in emerging markets where difficulties in dealing, settlement and custody could arise, resulting in a negative impact on the value of your investment.
• Unlisted investments such as private companies can increase risk. These assets may be more difficult to sell, so changes in their prices may be greater.
• Values for securities which are difficult to trade such as private companies may not be readily available and there can be no assurance that any value assigned to such securities will accurately reflect the price the Trust might receive upon their sale.  
• The aim of the Trust is to achieve capital growth. You should not expect a significant, or steady, annual income from the Trust.
• The Trust is listed on the London Stock Exchange and is not authorised or regulated by the Financial Conduct Authority.

The information and opinions expressed are subject to change without notice. This information does not in any way constitute investment advice or an offer or invitation to deal in securities.

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