Monks Investment Trust (LON:MNKS), one of the funds run by Baillie Gifford, is shifting its focus from mega-stocks such as Amazon, Alibaba and Google-owner Alphabet in favour of “a new wave of digital companies”.
After benefiting from large gains in the above giants, along with Facebook, Tesla, Visa and SAP, these have been sold down or exited in order to tilt towards rapid growth stocks this year.
The £3.2bn global investment trust, where Baillie Gifford aims for long-term capital growth over income, delivered a net asset value return of 55.5% in the year to April in sterling terms, versus its FTSE World index benchmark’s 33.9%.
April saw the retirement of star fund manager Charles Plowden, with the fund’s management now led by Spencer Adair.
Following the shift in recent months away from mega-stocks to the smaller, higher growth companies that the team calls ‘rapid growth’ stocks, the balance of the portfolio has shifted to 52% in rapid growth, compared to 22% in April 2015.
The investments digital companies has seen Visa switched for payments platform Adyen; software group SAP was swapped for customer communications group Twilio, web security group Cloudflare, cloud software platform Datadog and data platforms and analysis newcomer Snowflake.
Also within the rapid growth category, Monks added some fast-growing personal consumption and entertainment businesses such as online dating newcomer Bumble, TikTok owner ByteDance, online furniture platform Wayfair, computer games developer Epic Games, Tencent Music Entertainment and Barry Diller’s latest holding company IAC/Interactive.
more healthcare stocks, including mRNA and Covid-19 star Moderna, molecular diagnostics player Exact Sciences, implantable lenses developer Staar Surgical, insurance innovator Oscar Health, and biosimulation drug discovery specialist Certara.
“The cloud is one of the most important technology leaps since the personal PC became mainstream in the mid-1980s,” Adair said in the statement.
“New online entrants looking to disrupt traditional businesses now have very low barriers to entry, as a key raw material in data and storage can be rented cheaply from day one.
“We think these companies have huge growth opportunities if they can go on to dominate in their respective niches.”