Baillie Gifford & Scottish Mortgage: How Long-Term Thinking Beat the Market
Not many people have heard of Baillie Gifford, but it's one of the most interesting and successful investment firms in the world — and definitely one of the most unusual.
It started way back in 1908, in Edinburgh, Scotland, founded by two Scottish lawyers, Augustus Baillie and Carlyle Gifford. From the beginning, their idea was to invest with a long-term mindset, staying patient, thoughtful, and independent from short-term market noise.
The year after it was founded, in 1909, the firm launched a fund called the Scottish Mortgage Investment Trust. The name is confusing — there’s little to do with mortgages or real estate. It’s actually a public investment trust, like a mutual fund or ETF, traded on the stock exchange, and available for anyone to buy.
For decades, the fund was pretty conservative. It mostly invested in big UK companies and focused on generating dividends. But that all changed around the year 2000, when a man named James Anderson took over as lead manager.
James had a completely different way of thinking. He saw that traditional investors were ignoring the most important shift happening in the global economy: technology. Instead of playing it safe, he wanted to find and hold on to companies that were changing the world — and stay with them for 10, 15, even 20 years.
He and his team began investing heavily in companies like Amazon, Google, Tesla, and Alibaba — long before most big investors took them seriously. They also started investing in private companies that hadn’t yet gone public, like SpaceX, Stripe, and ByteDance (the company behind TikTok). This was very rare for a public investment fund. One of their biggest wins was Tesla. When most investors thought Elon Musk was too risky or eccentric, Baillie Gifford kept buying shares. When Tesla’s stock skyrocketed, the fund made billions — and their investors benefited.
Throughout the 2010s, Scottish Mortgage became one of the top-performing investment funds in the world. It was beating many Silicon Valley venture capital firms, even though it was based in Scotland and traded like a regular stock.
But nothing goes up forever.
In 2022 and 2023, as interest rates rose and tech stocks fell, Scottish Mortgage dropped by over 50%. Critics said they had gone too far, taken too many risks, and bet too much on tech. But Baillie Gifford stood by their approach. Their belief? You can’t back world-changing companies without going through world-shaking volatility.
Even with the downturn, Baillie Gifford is still managing over £200 billion and remains committed to its core principles: long-term thinking, innovation, and staying independent. They’re still based in Edinburgh. They’re still a private partnership — meaning they don’t have outside shareholders pushing for quarterly profits.
And they still believe that the best way to invest is to back founders with bold visions, and give them time to succeed.
In the end, the story of Baillie Gifford and Scottish Mortgage is a powerful example that you don’t need to be in Silicon Valley to find the future — sometimes, you just need to look farther ahead, and wait longer than everyone else.
Sources:
A.M.
