Tom Slater, co-manager of Baillie Gifford American fund

I think you're right. There are so many opportunities, but there are some big areas that really inform a lot of our thinking. Some of them have been growth areas for a while now. So think about the digitization of commerce. Now it's become increasingly easy to buy products online. You know, you go to your Instagram feed, you see a product that you like to click. Powered by Shopify, you have this really smooth checkout experience and then Amazon will show up the next day with your parcel. And so I think that ease is we're continuing to see this trend of commerce moving online onto mobile devices.

But you're also seeing new categories come online. So beauty is an example. You've seen the beauty industry start selling their products online, but they haven't really ever been digital first companies. But we have an oddity, for example, which starts out as an online company. You can't go to a physical store and buy the products and they're doing really well. So that's one long established one. I pick out in the same vein the way advertising is changing. So if you look at the way that advertising has changed online, it's been a huge growth industry. But the way we consume video is changing not just online but everywhere. So we're watching broadcast television less and less. Well, what we're much more likely to stream things and that means that the model of advertising that you've seen online is now moving to the living room. And that's a vast market. So there's lots of opportunities. Companies like the Trade Desk that tap into that.

But then there are some other areas where we haven't seen that type of dramatic change where I think we're starting to see real opportunities. Healthcare would be an example there where just the lead times are longer because it takes so much time to get approval for a new drug. But if you look at the tools that are now available to scientists, the depth of understanding that we're getting about the genetic and molecular nature of disease, and so that throws up opportunities. But healthcare is also changing. So the population is aging. You know, they have different needs. There are companies that are grasping that opportunity to provide services. And then maybe a final one to transport. We've seen that your work increasingly moving towards electric vehicles, but we're also increasingly moving towards autonomous vehicles. And it's actually quite hard to see that on the UK's roads. And that's partly regulatory constraints. But if you go and try full self-driving in a Tesla on US roads, it's a really pretty amazing experience. We own Aurora Innovation that they're building autonomous trucks, so big 16 wheelers they're launching commercially in the new year. So this technology that's been spoken about for a long time is really just on the cusp of becoming mainstream.

So in the long run, we believe that share prices follow earnings. So the profits of companies. And therefore we're looking for companies that have the opportunity to grow their earnings and their profits very substantially. And the good news is that the US is a great place to go looking for these companies. I think the calibre of entrepreneurs that you find, they're both homegrown and immigrant, but also the ability that they have to scale those businesses not just to come up with a new idea, but really grow it into something substantial and they're aided by what's happened in the world of technology over the past 10 or 20 years to actually go global and grow really big businesses. So we don't have a European equivalent of Facebook. You know, we don't have a European equivalent of Amazon, Nvidia who make the chips that are necessary for AI have a global opportunity. And so that's really important because in my experience stock markets are driven by a really small number of exceptional companies and the big ones that we've seen have come from the US. And I think that's a really important contributor to why the US market has done so much better than other stock markets. It's the outsized influence of those exceptional companies.

For us what we're looking to do is find companies that have that potential and be really long term patient owners. We don't try to trade in and out based on quarterly news flow. We know of small fluctuations in valuation and we don't want to dilute the impact of that small number of exceptional companies. So we only own around 40 stocks. The portfolio looks very different to the broader market. And as your question implies, you get volatility from that. And we believe that this is the best approach for delivering long term returns to our fund holders. But there's a price which is that you get volatility in the short run. And so as an investor, if you can't tolerate that volatility, seeing the fluctuations in the price of the fund, then Baillie Gifford American probably isn't for you.