AS I SEE IT: TERRY MURDEN says the handover at Scottish Mortgage lays the ground for further gains… and why nationalising ScotRail is no guarantee that the trains will run on time
We’re often reminded of Scotland’s pioneering financiers, their promotion of ideas and enterprise, the sort of attributes embodied today in those backing early stage businesses which may look like a risk too far but prove to be the biggest winners. Scotland invented the investment trust to spread risk among a number of firms and James Anderson, the veteran fund manager at Baillie Gifford, surely deserves a place at the top table of modern adventurers after overseeing the rise of a fund that has made many of its investors very wealthy.
It has been announced that he will retire in April 2022, giving his shareholders and colleagues plenty of time to adjust to the team that will be overseeing the rather prosaically-named Scottish Mortgage Investment Trust he has been running for two decades. Co-manager Tom Slater will stay in place with Lawrence Burns becoming deputy manager with immediate effect in a clear signal of stability and continuity.
They say the best returns come on investments played as a long game and those who put their faith in Scottish Mortgage Investment Trust have been rewarded handsomely for their patience. In the last year alone it gained 110% through Anderson’s belief in the new technologies and in the emergence of US and Chinese companies such as Alibaba and Amazon and a huge weighting in Elon Musk’s Tesla car manufacturer. Anderson has championed Musk, sometimes against market scepticism, but he’s the one with the last laugh.
That’s not to say there have been no setbacks. The trust’s shares fell sharply earlier this year as markets, particularly in the US, fell out of love with technology stocks. The trust cut its stake in Tesla, but a revival in sentiment towards tech stocks has seen it recover some of the ground lost. As some stocks were faltering the unquoted global payments processor Stripe came good.
Once again Anderson was an early investor in the San Francisco company and earlier this month it received a record valuation, nearly three times more than the $35bn it was valued at last April.
Anderson may be preparing to take his leave, but the trust – now one of the FTSE 100’s biggest constituents – will be on the prowl for the next big idea.
The railways are heading back into public ownership with those who have campaigned for the switch now under pressure to prove it will bring any real benefit.
There are arguments in favour of a nationalised network, but mainly for operational reasons, rather than for being making them more cost-efficient or reliable.
The UK network was nationalised after the Second World War because the private businesses were in trouble. The modern privatisation programme helped bring investment, but there has been no discernible improvement in performance.
However, those who have been championing the nationalisation of ScotRail will have to show that it will achieve better results. Abellio’s performance has actually improved, particularly after a large chunk of disruptive infrastructure work has been completed, and which was the responsibility of Network Rail, not ScotRail. Although they have worked in an alliance in Scotland, nationalising one without the other doesn’t offer any obvious benefit.
The Scottish Government’s decision to surrender to various pressure groups look like an attempt to disarm the opposition ahead of the election. Even the unions are all over the place, one rep claiming the green agenda was a factor in putting it back in public hands as well as the nasty practice of paying dividends to shareholders. Really? I asked Abellio if it had ever paid a dividend on its ScotRail income. I haven’t heard back, but I’d be surprised if it had. Let’s be honest, this is nothing to do with carbon footprints, nor commercial benefit. It’s political.
Who will run the new public rail agency? It will be the same managers and staff currently working for Abellio. Will the strategy change? No. Will there be more investment? Doubtful. Will more trains run on time? You know the answer already.