Baillie Gifford’s Anderson backs Italy in £2bn trust

Baillie Gifford’s James Anderson has bought into the Italian stock market for the first time in years, claiming Italy is in a better financial position than the UK.

The manager (pictured) of the £2.4bn Scottish Mortgage investment trust (a UK closed ended fund) said the nation is better governed now than at any stage over the past 40 years, and predicts it will be in a position to cut taxes within the next two years.

“I do not recognise much of the description of what is going on in Italy. I feel more upbeat about the prospects for Italy now then any time I can remember, because it is at the very end of this process,” he said.

“As long as nothing catastrophic happens in the world, Italy will be able to cut taxes from 18 months out. I think it is through the worst of it in a way the UK is not, and the pressures being applied by Angela Merkel are absolutely right,” he said.
The manager is backing up his conviction with a new position in Italian car firm Fiat, which is the first time the trust has invested in the country for years.

“Fiat’s management is strong and the extraordinary possibilities of Ferrari make a huge difference, “he said. Elsewhere in Europe, the manager is bullish on Scandinavia, in particular Sweden.

He said countries in Northern Europe appear to be the only ones in the developed world that have serious growth rates, very little unemployment and balanced government finances, which are set to stay that way for the long term.

The manager has owned shares in Swedish manufacturer Atlas Copco for many years and it is the trust’s fifth largest holding, making up 4.8% of its total assets.

“We have owned shares in Atlas Copco since 1986 and over that time it has done a fantastic job for us. It is a company with serious corporate management and engagement,” he said.

Poland is also another of the managers’ favoured countries, despite the difficulty in sourcing individual companies, with Anderson labelling it overlooked and undervalued. “I think there is a very educated and pretty undervalued labour force with sufficient scale there,” he said.

His pick of the region is low cost retailer, and Aldi rival Jeronimo Martins. Although the company is based in Portugal it owns the Biedronka supermarket chain in Poland.

Top 10 holdings  %
 Baidu  8.3
 Amazon  7.9
 Pinault Printemps Redoute  5.7
 Brazil CPI Linked  5.1
 Atlas Copco  4.8
 Tencent Holdings  4.3
 Illumina  3
 Google  3
 Intuitive Surgical  2.7
 Salesforce  2.6

As at 30 March 2012
Source: Scottish Mortgage IT

 

The article was first published on Investment Week

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