“Also, Japan is not unconnected with the rise of wealth in the East, and it has excellent businesses with which to exploit it and all from a comparatively low base in valuations terms.”
As long-term active growth managers, Baillie Gifford tries not to dwell on the short-term macro environment, and what really matters is companies which can grow significantly over five to 10 years.
“Our aim is to unearth the big winners of the next decade,” Budden said, adding that the company is looking to the future with optimism and excitement.
“Unless Mr Market has another trick in store for us, currently there seems to be a dislocation between the operational progress of many growth companies and their respective share prices.”
Budden mentioned Moderna, which is trading below its pre-Covid price despite revenue growing 187 per cent since 2019 and its profits growing 2,294 per cent.
“Some think Moderna is a one trick pony, yet it currently has 44 solutions trialling on its mRNA platform – the Covid vaccine was but one.”
Markets may be throwing out the baby with the bathwater, Budden said, and growth company valuations may currently prove to be at an attractive entry point.
“At some stage, strong corporate earnings will be rewarded in share price terms.”
Other themes which will dominate next year include the green revolution and decarbonisation affecting everything, alongside further digitisation of the economy which seems inevitable.
“Then we have the interface between data and geonomics which promises to personalise medicine which means moving emphasis from cure to prevention.
“But for fund managers, the challenge is to find the right companies to exploit secular changes like these and hold onto them through thick and thin.
“Some may prove to be turkeys, but the swans should suffice.”
sally.hickey@ft.com
