Japan’s smaller companies represent a “niche and overlooked” asset class, but that’s precisely the growth opportunity, says Brian Lum. The Baillie Gifford investment manager reveals some of the standouts he’s recently met, including a firm using AI to forecast the weather more accurately and another helping people with disabilities get hired.

Background:

Brian Lum became lead manager of Baillie Gifford Shin Nippon investment trust and joint manager of our Japanese Smaller Companies Fund in May. In this episode, he shares stories from a busy trip to the country, his first in his new roles. And he explains why Japan enjoys some of the world’s best conditions to nurture innovative and disruptive growth businesses.

Companies discussed include:

Weathernews – a business safeguarding ships and planes from storms and helping convenience stores anticipate which goods will experience surges in demand.

LITALICO – a firm that specialises in providing training to people with mental and physical disabilities.

Soracom – a company blending generative AI with Internet of Things sensors.

Seria – the retailer obsessing over every detail to make a profit from selling goods for the equivalent of 50p (65 cents).

Kohoku Kogyo – the manufacturer demonstrating high craftsmanship to ensure electric cars run safely and smoothly.

Resources:

Baillie Gifford Shin Nippon

Disruption Week

Japanese Smaller Companies Fund

Quantum Computing Since Democritus

Short Briefings on Long Term Thinking

SWCC Showa: rewiring Japan

Virtual visionaries: Japan’s Cover Corp rules the VTubing realm

Companies mentioned include:

Kohoku Kogyo

LITALICO

Nikkiso

PsiQuantum

Seria

Soracom

SWCC

Weathernews

Timecodes:

00:00 Introduction

01:55   Japanese influences

02:25  A focus on smaller companies

03:55  The Galápagos Syndrome

06:25  Learned lessons

08:00  Face-to-face meetings

08:55  LITALICO training workers with disabilities

12:55   Weathernews and climate change

15:00   AI-enhanced weather forecasts

16:35   Soracom mixes generative AI with the Internet of Things

20:40  Seria’s detail-obsessed 100-yen shops

23:15   Kohoku Kogyo’s crafted components

25:30  The long-term perspective

26:30  A niche, overlooked opportunity

28:30  Book choice

“If you’re trying to find the very best growth businesses on the planet – a benchmark isn’t a sensible place to start.” Baillie Gifford’s chief executive Tim Campbell explains the advantages of our style of active investing, the importance of long-termism and how AI fits into our process.

Background:

In April, Tim Campbell became Baillie Gifford’s chief executive and one of its managing partners. Earlier in his career, he was an investment manager before switching to Client Services, where he led our Emerging Markets Clients Team.

In this podcast, he explores how our investment teams adopted a conviction-led approach that centres on each company's merits, regardless of its weighting in benchmark stock indices. He describes what we mean by long-termism and the importance of having the right incentives in place. And he explains why being “out of step” with some market trends helps us serve both society and our clients’ interests.

The second half of the show focuses on changes afoot, ranging from further private company investments – including a recent holding in AI lab Anthropic – to our own adoption of artificial intelligence technologies and an exploration of new ways to access our strategies.

Resources:

Baillie Gifford: Actual investors

Disruption Week

Drayton and Mackenzie

One Useful Thing: Ethan Mollick’s blog

Our history

Private company investments

Short Briefings on Long Term Thinking

The Friction Project

Companies mentioned include:

Anthropic

Amazon

MercadoLibre

NVIDIA

Runway AI

Timecodes

00:00 Introduction

02:10 From music in the Middle East to investing in Edinburgh

03:15 Making the move to Client Services

05:00 Rewriting the investment playbook

06:30 Client hunger for benchmark agnosticism

07:40 Active versus passive investing

10:20 A mutual understanding with clients

11:55 Drawdowns and hold discipline

14:30 Defining long-termism

17:00 Private company investments

19:30 Investing in Anthropic and Runway AI

24:55 ‘The mission doesn’t change’

27:35 Book choice

Inside ownership can give companies an advantage when it comes to long-term growth. That includes having a leader or family with a substantial stake in the business. And it also covers firms with farsighted backers, such as philanthropic foundations, which encourage management to take the long view. From airline Ryanair to hearing aid specialist Demant, investment manager Jenny Davis explores how having skin in the game drives firms to act with persistence.

Background:

Jenny Davis is a Baillie Gifford partner and an investment manager in our International Alpha Team. She specialises in companies based outside the US that offer ‘quality growth’ – combining the potential for outperformance with durability.

In this podcast, she explores how persistent, inside ownership works to the advantage of companies she has backed. Examples include firms with founders who have retained a significant stake, those with long-serving hired leaders rewarded with shares and other long-term incentives, companies with family owners where control has passed between generations, and businesses backed by a foundation or holding company with long-term objectives.

Companies covered include:

Discovery – the health insurer that has gone global, using data to nudge customers into improving their fitness.

Ryanair – the European airline that benefited from its chief executive’s obsession with controlling costs.

Technoprobe – the family-run ‘probe card’ specialist whose ability to spot faults in computer chips has kept pace with semiconductors’ increasing complexity.

Demant – the hearing aid specialist backed by a charitable foundation, which has invested in getting closer to its customers.

Scout24 – the German property portal whose independence Baillie Gifford helped preserve, allowing it to pursue a successful long-term growth strategy.

Resources: 

Baillie Gifford

A new age of discovery: the case for international (restricted to certain clients)

Pioneers: 8 Principles of Business Longevity from Immigrant Entrepreneurs

Short Briefings on Long Term Thinking

Companies mentioned include:

Demant

Discovery Ltd

Ferrari

Hermès

Investor AB

LVMH

Novo Nordisk

Richemont

Ryanair

Scout24

Shimano

Technoprobe

TSMC

Timecodes:

00:00 Introduction

01:55  The “scenic route” to asset management

03:00  Focusing on quality growth

04:35  Persistence’s enduring edge

05:45  Different types of inside ownership

06:30 Discovery’s healthy nudges

08:10  Adrian Gore’s visionary leadership

09:45  How Michael O’Leary turbocharged Ryanair

12:45  Ryanair’s scale advantage

14:00  Technoprobe’s family leadership

16:25  Engaging with Richemont’s Johan Rupert

18:30  Demant’s long-term philanthropic backer

20:55  Providing persistence’s benefits to Scout24

22:55  Selling out of Credit Suisse

24:30  Persistence and alignment

26:10  Book choice

From microloans for farmers to free savings accounts for the ‘unbanked’ to customised insurance for gig workers to a cheaper, faster way for migrants to send money to loved ones: a growing range of services is helping many of the world’s least advantaged citizens increase their financial resilience. Previously, banks and other traditional lending institutions overlooked these customers. But as impact director Ed Whitten explains, by backing the companies now involved, you have an opportunity to improve people’s lives and achieve strong growth.

Background:

Ed Whitten is an impact director in Baillie Gifford’s Positive Change Strategy. Its dual objective is to provide our clients with attractive returns while contributing to a more inclusive, healthy world. Whitten’s role is to ensure that the companies it holds fulfil the second part of that pledge.

In this episode, he explores the topic of financial inclusion, explaining why the companies involved need to do more than simply provide access to loans, insurance and money transfers. Topics include how firms can use data and apps to deliver customised services that address specific people’s needs while protecting them from indebtedness. Whitten also explains how conversations with the companies Positive Change backs can nudge them towards better outcomes, such as providing customers with better financial education. And he explores the importance of helping people gain financial resilience against the effects of climate change and other events that could otherwise devastate their livelihoods.

Companies covered include:

Nubank – the digital-only bank used by most Brazilian adults that’s also growing in Mexico and Colombia.

Grab – the south-east Asian ride-hailing and delivery service that provides loans and insurance to drivers and merchants using its platform.

Remitly – the remittance service offering migrants a quick, low-cost and reliable way to transfer money to family and friends.

HDFC Bank – the Indian lender expanding its rural branch network to explain face-to-face how its services can put customers on a better financial path.

Resources:

Case study: Maliga

Nubank’s Beyond Access study

Positive Conversations 2024

The Song of the Cell

Trip Notes: Brazil (UK version / Ex-UK version)

Companies mentioned include:

Chime

Bank Rakyat Indonesia

Grab

HDFC Bank

MercadoLibre

Nubank

Remitly

Timecodes:

00:00 Introduction

02:05  From the British Army to impact investing

03:40  A sustainable, inclusive, healthy world

04:25  The different types of financial inclusion

05:40  Eyes open to the risks of indebtedness

06:45  Volatile repayment rates

07:35  Beyond accessibility: the personalisation of products

09:05  Partnering with CGAP and other development bodies

10:25   Nubank’s Caixinha money boxes

12:45   Nubank’s Mexican banking licence

14:15   Ensuring growth comes with impact

15:20   Grab’s loans and insurance

16:40   Grab’s data-driven approach to risk

19:45   The fast growth of remittances

21:25   Remitly’s cheaper money transfers

22:35  Gaining market share from Western Union

23:40  HDFC Bank’s expanding rural branch network

24:55  Financial inclusion in advanced economies

26:55  The ‘lucrative customers of the future’

28:15   Book choice

Emerging markets are reshaping the global economy, and a convergence of powerful, long-term trends is accelerating this shift. These include surging demand for commodities, exploding middle-class spending power and booming inter-regional trade.

Investment specialist Andrew Keiller reveals some of the standout growth companies positioned to capitalise on this transformation and why now might be the perfect time to take advantage.

Background:

Andrew Keiller is a partner in Baillie Gifford and an investment specialist in our Emerging Markets Clients Team.

In this episode, he discusses how some of the fastest-growing developing economies are driving change in the world and the forces that could further hasten that trend.

The discussion builds on his recent paper, Emerging markets in 2050: growth in a changing world, which identifies long-term structural shifts tilting the odds in favour of standout companies in Asia, Latin America and eastern Europe. In the podcast, he expands on this by identifying some of the companies that could be big winners, including:

• the lithium miner SQM (Sociedad Química y Minera de Chile), which is set to benefit from a mismatch in supply and demand for the critical ingredient to electric car batteries and other energy storage systems
• the South Korean high bandwidth memory chipmaker, SK Hynix, whose products are critical to training artificial intelligence systems at speed
• the ‘super-app’ operator Kaspi.kz, which provides everything from bill payments, banking and travel bookings to shopping, maps and messaging
•  the Singaporean ecommerce, fintech and gaming conglomerate Sea, whose chief executive has ambitions to extend into further sectors
• China’s biggest coffee chain, Luckin Coffee, which is giving the country’s 1.4 billion citizens a passion for the beverage with its ever-changing menu of inventive recipes

In addition, Keiller discusses the implications of President Trump’s tariffs and why many Chinese companies still offer an exciting investment opportunity.

Resources:

Emerging markets in 2050: growth in a changing world

Emerging markets: our philosophy

Emerging markets: rethinking the opportunity

Finding high-calibre growth companies in emerging markets (podcast)

Luckin Coffee: looking forward

Kaspi's super-app

South-east Asia’s rising export stars (podcast)

SQM: powering the future

The Time-Travelling Economist by Charlie Robertson

Companies mentioned include:

Kaspi.kz

Luckin Coffee

Sea

SK Hynix

SQM

Timecodes:

00:00  Introduction

01:35  Baillie Gifford beginnings and a trip to Hong Kong

03:15  Transformational trends playing out to 2050 and beyond

05:05  US exceptionalism and multiple spheres of influence

07:25  Rising trade between emerging market nations

08:35  Redesigning Chinese e-scooters for Vietnam and the Philippines

10:15  The possibility of reduced reliance on the US dollar

11:40  Increasing demand for raw materials and semiconductors

12:35 Digital-first companies and underserved communities

14:45  Four types of firms capitalising on long-term growth factors

16:25  SQM’s lithium mines in Chile’s Atacama Desert

17:55  Lithium’s long-term commodity cycle opportunity

18:45  SK Hynix’s high bandwith memory and its role in AI

20:40  Kaspi.kz’s Kazakh super-app

21:40  Kaspi’s expansion plans in Uzbekistan and beyond

23:00  Sea’s founder Forrest Li and importance of culture

24:30  Luckin Coffee’s huge domestic opportunity

25:25  Luckin’s taste for invention

26:40  Investing in China amid a trade clash

28:50  The risk of underexposure

29:40  Book choice

30:55  Investing in Africa

Which UK growth firms have the greatest long-term potential? Prime Minister Sir Keir Starmer has pledged to “turbocharge” his government’s growth strategy after the US’s introduction of new tariffs. It promises to prioritise a handful of growth-driving sectors, including advanced manufacturing, the creative industries and ‘digital and technologies’. Our head of UK equity, Iain McCombie, has already invested in leading companies in each of these fields. In this episode, he discusses their ambitious growth plans, the importance of adaptability and why he remains confident of delivering strong long-term returns despite the trade restrictions.

Iain McCombie is a partner in Baillie Gifford, our head of UK equity and joint investment manager of the Baillie Gifford UK Growth Trust. He also jointly manages our flagship Managed Fund.

In this episode, he discusses a selection of his portfolio companies that align with the growth-driving sectors the UK government promises to prioritise in its Invest 2035 strategy. These holdings include:

•  the engineering company Renishaw, which specialises in measuring and manufacturing systems providing high accuracy and precision to customers including the semiconductor industry
• the wargame miniatures maker Games Workshop, which is embarking on a TV and movie deal with Amazon
• the self-driving car software developer Wayve, which signed a deal with Nissan to use its technology shortly after we recorded this episode
• the financial services company Experian, whose vast collection of consumer debt data could become more valuable as artificial intelligence opens the door to new uses

In addition, McCombie discusses how the government’s ambitious housebuilding targets could benefit Volution Group, whose ventilation products defend against dampness and mould, and the reason why his passion for history has taught him to be an optimist.

Baillie Gifford UK Growth Trust

Investing in the UK’s best growth companies (webinar)

Creo Medical: at the spearhead of surgery

UK Growth Trust: a 2024 perspective

Calder Walton: Spies – the epic intelligence war between East and West

AJ Bell

Auto Trader

Experian

Games Workshop

Kainos

Renishaw

Volution Group

Wayve

Wise

00:00 Introduction

01:35  Three decades at Baillie Gifford

02:20  UK equities’ appeal

02:55  Jointly managing the UK Growth Trust with Milena Mileva

03:35  The relationship with the Trust’s independent board

04:40  The UK government’s growth plans

05:40  Responding to US tariffs

06:50  Taking a long-term perspective

07:55  Advanced manufacturing: Renishaw

09:45  Industrial 3D printers

10:50  Creative industries: Games Workshop

12:45  Licensing Warhammer to Amazon

14:15  Digital and technologies: Wayve’s self-driving vehicle software

16:45 Kainos and AI

19:20  Auto Trader car-selling digital business

21:35  Financial services: Wise and AJ Bell

23:35  Experian’s consumer debt data

25:20  Volution Group: ventilation for new homes

27:25  The advantage of active investing

28:35  Book choice and lessons from history

Are European stocks coming back into favour? After years of underperformance, many of the continent’s companies appear undervalued when compared to their historical prices and US counterparts. Investment manager Stephen Paice suggests that a group of growth-focused stocks could be among the biggest winners if sentiment shifts, and he identifies a handful of places they are thriving.

Background

Stephen Paice is a partner in Baillie Gifford, our Head of European Equities, an investment manager on the Baillie Gifford Growth Trust and European Fund, and a member of our International All Cap Portfolio Construction Group.

In this episode of Short Briefings…, he explores why European stocks have been trading at levels that make them appear historically cheap, what might cause opinion to turn, and how that relates to his pursuit of long-term exceptional growth.

Topics discussed include why some companies are more resilient than others to trade tariffs and other price pressures, changing attitudes to regulation, and the importance of culture.

Stephen also spotlights four categories of growth companies he believes offer huge promise:

• the biological revolution: firms pioneering new treatments thanks to technological advances and deeper scientific understanding, with a focus on Novo Nordisk, Lonza and Camurus
• dominant digital platforms: businesses carving out leading positions in niche markets, with special mention of Spotify and Adyen
• semiconductors: companies fulfilling critical roles in the computer chip supply chain, including ASML and ASM International
• luxury goods: companies deriving powerful advantages by bringing historic and prestigious brands under the same roof, including LVMH and Richemont

Resources

Future stocks: our best ideas in Europe

Europe’s hidden tech titans

Benjamin Labatut: The Maniac

Gary Klein: Seeing What Others Don’t

Paul Kalanithi: When Breath Becomes Air

Richard Thomson: Apocalypse Roulette

Companies mentioned include

Adyen

ASM International

ASML

Camurus

Lonza

LVMH

Novo Nordisk

Richemont

Schibsted Marketplaces

Spotify

Timecodes

00:00  Introduction

01:45  From games of chance to European equities

03:30  The valuation opportunity

04:35  Addressing uncertainty and political instability

06:35  President Trump’s trade tariffs

08:30  Regulation and innovation

10:45  Our long-term growth investment philosophy

13:00  The case for Novo Nordisk

14:35  Tackling Wegovy’s muscle mass loss

15:25  Lonza’s growing market for biologics

16:50  Camurus’s FluidCrystal technology

18:05  Dominant digital platforms with network effects

19:40  Spotify chief executive Daniel Ek’s focus on customers

21:55  The importance of Adyen’s culture and leadership

24:40  ASML and ASM International’s semiconductor tools

27:25  Luxury conglomerates LVMH and Richemont

30:00  The advantage of ‘family involved’ companies

31:10  Being patient and putting up with volatility

31:55  Book picks

32:55  Spotting inconsistencies

Three technologies – quantum computing, reusable space rockets and nuclear fusion – could change the trajectory of human progress. Investment manager Luke Ward explains how a trio of private companies are bringing them closer to fruition.

Background:

Luke Ward is an investment manager in Baillie Gifford’s Private Companies Team and recently became co-manager of the Edinburgh Worldwide Investment Trust.

In this episode of Short Briefings…, he discusses three companies developing groundbreaking technologies and building innovative businesses as they do so:

• PsiQuantum, which aims to create the world’s first useful quantum computers
• SpaceX, which is well on its way to developing the first fully reusable space rocket, with a view to ultimately transporting people to Mars
• SHINE Technologies, which is commercialising applications of nuclear fusion on the path to delivering a clean and safe energy source for the future

Among the topics Ward covers are how photon-based quantum computers could drive progress in agriculture and batteries, among other industries. He also discusses how the Starlink satellite broadband provides a stepping stone to SpaceX’s larger ambitions. And he explains how SHINE’s work on detecting flaws in mission-critical aerospace components and making a new cancer treatment possible bring it closer to harnessing the reaction that powers the sun.

Resources:

PsiQuantum: making the leap to quantum computing

PsiQuantum: stock story

SHINE Technologies: an interview with chief executive Greg Piefer

SpaceX and other private company trailblazers

Starlink: broadband from above

Edinburgh Worldwide Investment Trust

Your vote, EWIT’s future

EWIT: Saba vote

Companies mentioned include:

PsiQuantum

SHINE Technologies

SpaceX

Timecodes:

00:00 Introduction

01:50  From mechanical engineering to investment

02:55  Technological innovation informing business innovation

03:45  Quantum computing versus the ‘classical’ approach

04:55  Using quantum computers to disrupt chemical fertilisers

06:10  PsiQuantum’s semiconductor supply chain advantage

07:20  A photonic approach to computing

08:05  Signs that PsiQuantum could succeed

09:45  PsiQuantum’s potential business model

10:30  Partnering with Mitsubishi Chemical and Mercedes-Benz

11:35  SpaceX: satellite launches and advanced rockets

12:35  Starlink’s high-speed internet from orbit

13:40  Connecting smartphones directly to Starlink

15:05  The investment case for Mars

16:55  Leading Baillie Gifford’s SpaceX investment in 2018

19:35  Considering other space industry investments

10:21  Nuclear fusion v fission

22:25  SHINE Technologies’ stepping stone approach

23:20  From advanced imaging to radiopharmaceuticals

24:15  Clinical trials for prostate cancer treatment Lutetium-177

24:40  Recycling nuclear waste

25:50  Saba vote: giving the public access to private companies

27:35  Investing in geothermal energy

28:30  Seeking inspiration in Silicon Valley

One way to find great investment opportunities is to ask yourself what must change over the years ahead. In this episode, Baillie Gifford partner Stuart Dunbar explores the increased use of robotics to fill gaps in the workforce and medical advances that help keep healthcare affordable, among other transformational themes.

Background:

Stuart Dunbar is a client relationship director and coordinates Baillie Gifford’s global marketing and product development activity, which includes responsibility for the firm’s Actual investors campaign.

For this Short Briefings… episode, he challenged himself to identify five transformational growth drivers that are both inevitable and investable. His picks cover:

• the rise of robotic systems that can make sense of their immediate environment and act autonomously
• the intelligent design of drugs and other efforts to deliver less costly, more effective healthcare
• the energy transition to renewables and electrification of transport
• greater dependence on the infrastructure underpinning digital payment systems
• the dawn of automated transport, including driverless trucks and delivery drones

Dunbar explains the factors making these forces of change necessary, including the ageing populations of many developed countries, the resulting labour shortages and rising medical budgets.

He also names some of the companies we have backed that could benefit, either by pioneering new or better ways of doing things or by playing critical roles in the involved supply chains. These range from John Deere & Co, whose self-driving tractors and precision-applied pesticide technologies help farmers increase yields and cut costs, to Nexans and Prysmian, whose extra-high-voltage cables connect offshore wind turbines to onshore energy grids.

Resources:

Actual investing: why thinking differently matters

Christiana Figueres: stubborn optimism

Eureka Alert: Cheryl Mehrkar’s robotic surgery

Michael Lewis: Going Infinite

Stuart Dunbar on growth investing (video)

Zeke Faux: Number Go Up

Past Short Briefings… episodes

Companies mentioned include:

Adyen

Amazon

Aurora Innovation

CATL

Coupang

Deere & Company

Enphase

Intuitive Surgical

Keyence

Moderna

Netflix

Nexans

Novo Nordisk

Nubank

Prysmian

Redwood Materials

Remitly

Renishaw

Wise

Zipline

Timecodes:

00:00 Introduction

1:30    Starting out in Hong Kong

2:20    Joining Baillie Gifford

3:20    The importance of optimism

4:30    Five inevitable, investable themes

5:45    Robotics and demographics

6:40    Investing in the rise of autonomous systems

8:30    Renishaw’s sensors

10:05  Intuitive Surgical and Deere & Co’s seeing robots

12:15  The intelligent design of drugs and Recursion Pharmaceuticals

15:40  Lower-cost healthcare

16:45  Selectively picking biotech winners

17:55  The energy transition and President Trump

19:40: Stubborn optimism

21:10  Undersea cables and solar installation

23:11  A new generation of payment providers

26:00  Delivery drones and self-driving vehicles

27:40  Focus on possibilities and what’s changing

28:35  Book picks – exploring cryptocurrencies

The US’s transformational upgrade of its drainage, power and road networks is a long-term investment opportunity hiding in plain sight. In this podcast, Michael Taylor reveals some of the outstanding companies involved and makes the case that the markets have yet to fully appreciate the advantages working in their favour.

Background:

Michael Taylor is an investment manager in Baillie Gifford’s US Alpha strategy. In this Disruption Week briefing, he explains why years of neglect coupled with the destructive consequences of wild weather and our insatiable appetite for data-processing power have led the US to embark on a massive renewal of its physical infrastructure.

Taylor suggests that many of the companies creating long-term value benefit from supply advantages, which help them defend their commoditised products’ prices. These range from ownership of gravel quarries, which are difficult to get planning permission for, to the use of a gigantic, portable plastic drain-making machine.

In addition, Taylor discusses what a second Trump presidency might mean for the sector and why finding standout companies involves travelling off the beaten track.

Resources:

Disruption Week

Building back: the great US infrastructure opportunity

Spotting the winners from the great US infrastructure renaissance

Companies mentioned include:

Advanced Drainage Systems

Eaton

Comfort Systems USA

Martin Marietta

NVIDIA

Stella-Jones

Timecodes:



00:00 Introduction

1:35    Exceptional businesses confronting an exceptional problem

3:20   The US v global infrastructure opportunity

4:35   Donald Trump’s second presidency

6:40   The benefits of patience

7:35   Wild weather

8:45   Investing in Advanced Drainage Systems

11:05  Labour shortages

12:15  Stella-Jones’s wooden telegraph poles

14:05  Tree-spotter specialists

16:15  Martin Marietta’s supply-side advantage

18:55  Recycled aggregates’ limitations

20:15  Finding US infrastructure investments

21:45  Comfort Systems USA and keeping datacentres cool

24:20  “Massive in terms of magnitude of spend and duration”