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What lies ahead: Milena Mileva and the International All Cap strategy

September 2022

Key Points

  • Milena Mileva brings deep knowledge of UK growth stocks to the International All Cap Strategy’s Portfolio Construction Group
  • The investment manager highlights the transition to cleaner energy and adoption of advanced manufacturing techniques as being promising trends
  • And she says human ingenuity will continue to generate opportunities for strong returns long into the future

© Chris Close

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

As Milena Mileva walks in, a wave of energy sweeps across the blue room in the Kimpton Charlotte Square Hotel in Edinburgh.

In April, Mileva officially became an investment manager on Baillie Gifford’s International All Cap Strategy. But she has actively participated since last September when the firm first announced the appointment. She combines this responsibility with her longstanding role on the firm’s UK Equity Team and brings her expertise in the country’s growth stocks to her new post.

Declining a coffee, she dives straight into conversation. We begin by discussing some of the investments made since her start. Sharp-eyed investors may have noticed a slight evolution in the Developed EAFE All Cap portfolio, with new additions including four UK-based companies:

  • Farfetch, the luxury online fashion store
  • Experian, the credit score company
  • Wise, the exchange-rate platform for consumers and small to medium enterprises
  • Games Workshop, the maker of fantasy table-top battle games and the miniature character pieces involved


These names, among other recent UK investments, suggest Mileva’s influence. However, she stresses that investment decisions are shared with the strategy’s other portfolio managers and are finely tuned since the strategy only holds between 50 to 90 stocks. The team selects companies from all the world’s major markets, excluding the US.

What if she or one of the other four members of the construction group disagree?

“We don’t have any vetoes,” Mileva answers. “And as we share the same investment style and philosophy, we’re unlikely to have any radical disagreements. If we did, the onus would be on the sponsor of the stock to do some follow-up, answer any outstanding questions and provide reassurance. But in practice, this doesn’t happen.” 

Challenge and debate

Mileva sees herself as the natural challenger within the group. A sceptic who asks questions and tends to probe. She jokingly attributes this to growing up with a strong mother and grandmother. Yet she recognises the need for balance.

“Ideas are fragile things,” she explains. “You need to have personalities who nurture them –something my colleagues Sophie Earnshaw and Joe Faraday are excellent at. We need a combination of temperaments because everyone has a blind spot. So it’s about being able to complement each other and understand where our natural strengths are.” 

© Chris Close

I ask whether it can be challenging to make decisions, especially if it concerns a stock where the investment managers have got to know the company’s leaders well.

Investment managers must be objective, Mileva replies. “All we do as investors is construct hypotheses, but we need to be able to recalibrate from information or evidence. We need to be enthusiastic in backing our convictions to make a case for investing in a stock, but we must recognise things change all the time. I think removing the ego from decisions is important – it makes it easier when you’re trying to figure out a company and think what might happen.”

Seeing into the future 

Baillie Gifford investment managers spend a lot of time looking into the future. Beyond their own research, that involves consulting experts from many fields to explore trends that could shape growth and deliver strong returns to clients.

One area Mileva is excited about is the use of automation and other advanced manufacturing techniques to improve efficiency and sustainability.

She mentions the industrial tool manufacturer Atlas Copco as one example. It acquired ISRA Vision in 2020 for its ‘intelligent machine vision systems’. These imitate the human eye to detect faults in components and automatically carry out other quality assurance tasks.

And she gives Keyence as another. The Japanese firm makes sensors, measuring instruments and other products that its customers use to automate and simplify complex tasks in factories and research labs.

Perhaps the area Mileva is most excited about, however, is the application of artificial intelligence (AI) in drug discovery and development. “Productivity of R&D [research and development] in pharmacology is dismal. It takes 10 years to get a drug to market and costs about $2bn to develop one,” says Mileva.

“The industry failure rate for new drugs is around 90 per cent. If a company can create great efficiencies in the various stages of development – from discovering a target or designing a molecule to clinical trial – then the possible value for customers and returns to investors are vast. For instance, a system that learns from huge amounts of processed data from patient tissue samples to see the effects of drugs on tumours could be very successful.”

Investing in such a nascent field is risky. But one way to gain exposure relatively safely is to invest in ‘picks and shovels’ companies – those providing services and technologies to enterprises taking the more perilous biotech bets. Mileva sees parallels with the semiconductor industry. There, leading computer chip designers tend to outsource the capital-intensive and time consuming manufacturing process to specialists. Biotech companies seem to be doing something similar.

ⓒ Lonza. Lonza makes equipment that helps its clients create and mass produce antibodies, among other biotherapies

Mileva gives Lonza as an example of one beneficiary. The Swiss company develops and manufactures advanced biologic drugs – which target parts of the immune system to treat disease – and other treatments under contract for its customers. Lonza enjoys about 30 per cent of its specialised market. The strategy first invested in the business in May.

In addition, some of Lonza’s equipment is made by another specialised company, Germany’s Sartorius. It’s been in the portfolio since 2017 and offers solutions to help biopharma companies develop, produce and safely transport their treatments.

Decarbonisation innovation

Mileva also sees the transition to cleaner energy as a potentially rich source of opportunities. Still, as a stock-picker, she admits the challenge is to identify companies with an edge that means they should outperform rivals. One such holding is CATL, the Chinese electric battery company.

“CATL benefits from a huge competitive advantage because the Chinese government is providing so much support to electrify transport,” observes Mileva. “With China the largest electric vehicle market in the world, it’s almost inevitable that any company with 50 per cent of battery sales at home will enjoy a lead over the international competition because it already has the top technology, R&D and scale of production.” 

Our conversation now turns to less positive topics – inflation, recession and volatility. It is a difficult time for investors, admits Mileva. “We are very aware clients have trusted us with their money and we sympathise with their experience, but ultimately we believe that a long-term growth investing approach will generate good returns. Of course, there will be periods of underperformance, which will be quite uncomfortable. Volatility is undesirable but ultimately it doesn’t matter if we can preserve and grow investors’ capital.”

She adds, regarding inflation, that the portfolio contains several high-margin stocks that can absorb price rises and have previously withstood recessions, such as Games Workshop, offering plenty of resilience. 

But she says the long-term focus remains on opportunities arising out of rapid technological change. “As growth investors, we capitalise on the vast amount of human ingenuity committed to solving some of the most intractable problems we face. Those that are successful are the companies that become huge and profitable and make great investments.”

Portfolio Construction Group, from left to right: Iain Campbell, Sophie Earnshaw, Stephen Paice, Joe Faraday and Milena Mileva.

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Risk Factors        

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 was produced and approved in September 2022 and has not been updated subsequently. It represents views held at the time of writing and may not reflect current thinking.

Potential for Profit and Loss

All investment strategies have the potential for profit and loss, your or your clients’ capital may be at risk. Past performance is not a guide to future returns.

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The images used in this communication are for illustrative purposes only.

Annual Past Performance to 30 June Each Year (Net %)






Developed EAFE All Cap Composite













Annualised returns to 30 June 2022 (%)

1 Year

5 Years

10 Years

Developed EAFE All Cap Composite








Source: Baillie Gifford & Co and underlying index provider(s). USD.

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