Trustnet Magazine 58 January 2020 | Page 16

Advertorial feature of at least €500 million. This broadens the opportunity to invest to about 1,150 companies. Over the next two to three years, we also expect to invest in unlisted companies valued at a minimum of €500 million, enabling us to invest in Europe’s most exciting growth companies, listed or not. However, we will not invest more than 10 per cent of the trust’s portfolio in these private companies. We are not looking to invest in embryonic businesses or ideas, but in established businesses choosing to remain private for longer. Businesses like these tend to be asset-light and do not require much capital, while owners TRUSTNET [ BAILLIE GIFFORD ] 16 / 17 We are not looking to invest in embryonic businesses or ideas, but in established businesses choosing to remain private for longer often find it is easier to create long-term value without short-term shareholders. Baillie Gifford has been investing in unlisted companies since 2012. We believe that unlisted companies like these are better held within the structure of an investment trust than a fund. Our shareholders can trade in the trust’s shares at the market price whenever they wish, while the closed- end structure of an investment trust means that there is never any need for us to sell any of our holdings to fund redemptions. So far, only around 10 per cent of the world’s unicorns – private companies valued at over $1 billion – have come from Europe, so it still has some catching up to do. Yet when we speak to companies in Berlin and Stockholm, we can see that the mindset is changing. The trouble with Europe Investors may be cautious about investing in Europe. Economic growth is uninspiring, its politicians even more so. Europe lacks a technology giant, and its lacklustre stock market is dominated by large, bureaucratic multinational companies in sectors such as financials, consumer staples and even healthcare. We are not buying those companies, however. We are investing in a small number of innovative, proactive companies that happen to be domiciled in Europe. Looking at the European market over the past 30 years, it is niche industrial businesses that have delivered the best returns, companies such as ASML, whose lithography systems allow light to be projected through patterns to make blueprints for manufacturing semi-conductor chips, or Beijer Ref, whose environmentally-friendly fridges and freezers play a key role in reducing CO2 emissions in supermarkets and other commercial premises. trustnet.com