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Anderson hits out at lack of long-term strategies

JAMES Anderson, manager of Baillie Gifford's £2.4 billion Scottish Mortgage Investment Trust, has said most British companies have been ruined by pay policies that encouraged short-term thinking.

Scottish Mortgage is a major backer of technology companies, with stakes in the likes of American giants Amazon, Facebook, Google and Apple.

Mr Anderson, based in Edinburgh, is particularly keen on those managed by their founders who retain an interest in their product development. But he has invested closer to home, with one exception being Glasgow-based temporary power company Aggreko, which is benefiting from growth in emerging markets.

He said: "There are few British companies that have not been ruined by the remuneration structures that were set up for them in the past few decades."

Baillie Gifford's 100-strong investment team is a major force in Scottish fund management but Mr Anderson is highly critical of the industry at large.

"Most of what goes on in fund management is really rather stupid," he told an audience at the London Stock Exchange. "I see no evidence that the financial services industry is able to become long-term in its thought processes."

He was particularly damning of those listed on the stock exchange.

Mr Anderson said the domestic investment industry is too focused on information from sources in the UK and US. "Why would anybody believe what anybody in London says about Europe? They have been consistently wrong about it for 70 years, if not the last 700 years. Why not ask some Germans?"

He said he expected the investment scene to be dominated by a few companies with highly destructive models in the way that Amazon has put pressure on the likes of camera store Jessops and entertainment retailer HMV, both of which have entered administration in recent days.

Mr Anderson also said he would not retire until shares in the trust trade at a premium to the value of the underlying portfolio. It is currently on a discount of around 6.5%, according to the Association of Investment Companies.

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