Anderson: ‘FTSE 100 is really a 19th century index’

James Anderson of Baillie Gifford. Picture by Matt Marcus.

Baillie Gifford fund manager James Anderson said the FTSE 100 “is really a 19th century and not even a 20th century index” and that the UK lacks enough innovative and fast-growing companies.

Anderson spoke of a “deep sickness” in UK capital markets that has stifled the growth of tech entrepreneurs.

Anderson is best known as the co-manager of Baillie Gifford’s high-flying flagship fund, the £18 billion Scottish Mortgage Investment Trust, which produced its strongest ever return in the year to March 31 with its share price soaring 99% in the period and net asset value (NAV) total return rising 111% versus the 39.6% return of its benchmark, the FTSE All-World Index.

In an interview with London newspaper The Financial Times, Anderson was quoted as saying: “Why have we not grown any giant companies?

“Of course I’m not expecting everybody to be like (Amazon founder) Jeff Bezos.

“But it seems to me there is a real problem here …

“The FTSE 100 is really a 19th century and not even a 20th century index.”

Anderson continued: “Why is it that people are happy to take high pay for relatively undemanding things, but they don’t dream of creating these truly great companies?

“I find that sort of depressing, and there must be so many different causes of it.

“Plenty of them are on my side of the fence. But something’s quite wrong, it seems to me.”

Anderson also warned that too many investment firms “are run as businesses and for businesses and themselves rather than being investment organisations.”

He said: “Such are the sums of money involved, that may be a huge temptation.”

Scottish Mortgage benefited hugely in recent years from smart investments in global companies including its 12 biggest holdings — Tencent, Illumina, ASML, Amazon, Tesla, Alibaba, Meituan Dianping, Moderna, NIO, Deliver Hero, Netflix and NVIDIA.

The trust has delivered 1,500 per cent returns for shareholders since Anderson began running it in 2000, compared with 277 per cent for the FTSE All World benchmark.

Baillie Gifford said in March that Anderson will leave the firm on April 30, 2022, to join the Swedish investment company Kinnevik AB, whose shareholders include Sweden’s wealthy Stenbeck family.