By Jemima Kiss. Spring 2021
  2. How can we best invest to make life better for all, including the world’s poorest? Kate Fox and Lee Qian, joint managers of Keystone Positive Change Investment Trust, explain their approach to Jemima Kiss

    Please remember that the value of an investment can fall and you may not get back the amount invested.

    This article originally featured in Baillie Gifford’s Spring 2021 issue of Trust magazine.

  3. When Lee Qian was born in Nanjing in 1991, some two-thirds of the Chinese population lived in poverty. He grew up in a small apartment with no central heating, the living room doubling as his parents’ bedroom. But the 1990s also marked China’s dramatic shift from state-controlled communism to a more free-market economy. As a result, by 2015 some 746 million people had been lifted out of poverty – and Qian keenly felt the benefits of this transformation. “I saw how entrepreneurs used their ingenuity to solve problems and create jobs, allowing people to earn more and access better food, healthcare and education. That was hugely impactful for me,” he says.

    It’s this belief in the transformative power of capitalism that drives his passion for the Keystone Positive Change Investment Trust, Baillie Gifford’s latest closed-ended fund. Jointly managed by Qian and Kate Fox, the trust takes a strikingly different approach by actively investing in innovative companies that contribute to its goal of a more sustainable and inclusive world, rather than excluding sectors based on off-the-shelf ESG ratings. Fox says it’s about providing solutions to global challenges: “This isn’t just about avoiding companies doing harm, or supporting businesses adopting sustainable and responsible business practices, it’s about trying to identify the companies intent on delivering change to make the world a better place.”


    Kate Fox and Lee Qian in Edinburgh.
    Photography by Chris Close.

  4. Positive Change has four impact themes: social inclusion and education; environment and resource needs; healthcare and quality of life; and ‘base of the pyramid’ services that support economic improvement for the world’s least advantaged.

    For example? The Danish company Ørsted builds and operates offshore wind farms, and in 2020 generated 21 terawatt hours of renewable electricity. “The impact of that energy is it helps to decarbonise our energy needs and reduce CO2 emissions,” explains Qian. “Last year, Ørsted helped reduce CO2 emissions by more than 11m tonnes, which clearly maps on to several of the UN’s Sustainable Development Goals.”

    Safaricom, a Kenyan mobile operator, provides basic but transformative connectivity. “We think technology will become even more important in all our lives, and is particularly impactful in emerging markets, where it makes basic services more accessible and democratic,” says Qian. Safaricom’s M-Pesa payment service has been operating for over 10 years now, allowing anyone with a mobile phone to transfer money to friends, family or retailers. “It allows people to participate economically, to trade, save or borrow money or to pay for their kids’ education. It’s extremely exciting and impactful.”

    A shareholding in a semiconductor company might seem an unusual impact investment, but the Dutch business ASML is one of the largest holdings in the portfolio. ASML’s hardware, software and services help to create critical components, no bigger than your fingernail, that are used in smartphones and consumer electronics. “Connectivity equals both productivity and inclusivity,” says Fox. “ASML is one of the most important tech businesses you’ve never heard of.”

    And in the healthcare category, Dexcom makes sensors that can provide continuous glucose monitoring for some of the world’s 476 million diabetes sufferers. Based in San Diego, California, it provides a far more convenient, less invasive and consistent record of a patient’s glucose levels. “A continuous reading is really important and helpful in managing the condition,” according to Fox.

    Diabetes is a chronic condition that leads to long-term health complications and costs the US healthcare system alone an estimated $327bn every year. “Dexcom’s products improve patients’ quality of life and reduce the number of complications and hypo or hyperglycemic events. It is now treating 650,000 patients and being rewarded with growing revenues. It’s a great illustration of how our objectives of positive impact and successful investing go hand-in-hand, and that’s core to our philosophy.”

    The process of finding good fits for Positive Change is “organic”, explains Fox. She means that the trust doesn’t use quantitative filters, but looks for passionate individuals with impactful ideas.

    The Positive Change Team identifies companies whose products and services are an improvement to the status quo, seeking growth businesses with sustainable competitive advantages. In addition to analysing the investment and impact potential, once a company is in the portfolio its impact is monitored through a robust assessment system. “For each company, we’ve identified a set of metrics that help us track and monitor change,” she adds. “We also link a company’s products and services to the UN’s Sustainable Development Goals, using the targets that underpin them, to help articulate how the holdings and portfolio are driving change.” To demonstrate this, the team publishes an annual Positive Change Impact Report, which is externally verified.

  5. The four themes of Positive Change



    “There are still so many challenges to address, but we believe businesses can be part of the solution”


    Qian describes the character of the trust as fundamentally optimistic. “As we’re seeing people in different companies and different countries, we get a sense of optimism that there’s so much that unites all of us in striving for a better future. We all want a better living standard for our children, a more comfortable home and better healthcare. We’re excited about helping unleash the support and investment that entrepreneurs need to foster new ideas and grow their businesses.”

    Fox, who started her career at Baillie Gifford in 2002, says: “I’ve never found my job more rewarding. It’s a hugely privileged role being an investment manager, channelling capital to grow it on behalf of clients. As asset managers, we have a responsibility to contribute to meeting the UN’s Sustainable Development Goals by channelling capital and meeting that financing gap.” For her, delivering positive change and attractive investment returns go hand-in-hand, and Qian agrees. “There are still so many challenges to address, but we believe businesses can be part of the solution and that’s hugely motivating. I can’t imagine anything more exciting than Positive Change, helping leverage the power of capitalism, entrepreneurship and innovation to create a better future.”


    If you’d like to hear more from Lee Qian about why we should never underestimate our ability to adapt and to find new ideas, listen to Sustainable investing: How innovation improves our future in our podcast series Short Briefings on Long Term Thinking. You can find the podcast at bailliegifford.com/podcasts or subscribe on Apple Podcasts, Spotify or TuneIn.

  6. If you would like to register to receive Trust magazine please visit bailliegifford.com/trust
  7. Investments with exposure to overseas securities can be affected by changing stock market conditions and currency exchange rates. Investing in emerging markets is only suitable for those investors prepared to accept a higher level of risk. This is because difficulties in dealing, settlement and custody could arise, resulting in a negative impact on the value of your investment.

    The views expressed in this article should not be considered as advice or a recommendation to buy, sell or hold a particular investment. The article contains information and opinion on investments that does not constitute independent investment research, and is therefore not subject to the protections afforded to independent research.

    Some of the views expressed are not necessarily those of Baillie Gifford. Investment markets and conditions can change rapidly, therefore the views expressed should not be taken as statements of fact nor should reliance be placed on them when making investment decisions.

    Baillie Gifford & Co Limited is wholly owned by Baillie Gifford & Co. Both companies are authorised and regulated by the Financial Conduct Authority and are based at: Calton Square, 1 Greenside Row, Edinburgh EH1 3AN.

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

    A Key Information Document is available by visiting bailliegifford.com


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  8. Jemima Kiss

    Jemina Kiss has been covering tech since 2002, and spent 10 years at The Guardian. Based in San Francisco, she recently launched Hothouse Solutions, a weekly climate action newsletter.

    Illustration by darlingforsyth.