In the latest edition of Meet the Manager, BDO Private Wealth had the privilege of hosting Ian Boater from Vanguard Australia and Ben Drury from Baillie Gifford. The discussion centred around the Vanguard Active Global Growth Fund, which has appointed Baillie Gifford as its Investment Manager, a collaboration that brings a low-cost yet institutional-grade investment approach to clients in Australia.
Ian is responsible for developing and implementing Vanguard's active strategy, connecting portfolio construction solutions with financial advisors across Australia, managing growth, and building relationships with Vanguard's active clients.
Ben joined Baillie Gifford in 2011 and is a Client Service Director, focusing on Global Alpha clients. Previously a qualified chartered accountant, Ben worked for several years in San Francisco, serving various clients in the asset management industry.
Investment philosophy and approach
The Vanguard Active Global Growth Fund made its debut in Australia in September 2019, boasting a three-year Australian track record. Globally, Vanguard has been partnering with high-quality external managers like Baillie Gifford, allowing them to offer low-cost, institutional-grade solutions to clients in markets such as Australia. The strategy employed by the fund, known as Global Alpha, was first initiated in 2005 by Baillie Gifford, and has been in partnership with Vanguard since 2008 with US investors.
The primary objective of the Global Alpha strategy is to identify growth companies that can significantly enhance clients' returns over a five to ten-year horizon. It seeks companies capable of doubling in size within this timeframe, an endeavour that necessitates finding a select few enterprises with transformational potential. The management of the portfolio follows a team-oriented approach, with six individuals directly involved in investment decisions.
The Vanguard approach is open-minded and curious, exploring opportunities across various sectors without preconceived notions of what successful companies should look like. By considering multiple potential outcomes in a probabilistic manner, the team identifies companies where the market underappreciates the probability of success and the associated rewards. This approach is further reinforced by seeking opportunities that fit within one of three growth profiles: compounders, disrupters, and cyclical businesses.
Addressing supply chain uncertainty
In the current landscape of supply chain disruptions, evolving consumer behaviour, and new emerging monetary and fiscal policies, the investment team at Vanguard seeks resilient companies that can adapt and withstand these challenges.
Rather than making specific forecasts about inflation rates or untangling supply chains in different regions, Vanguard seeks out companies that can address such challenges head-on and strengthen their competitive position compared to more constrained competitors. The focus is on companies with pricing power and the ability to adapt and evolve, as investing in these companies positions their portfolio to better weather market uncertainties.
The Vanguard Active Global Growth Fund, under the expert management of Baillie Gifford, offers a strategic approach to investing. By targeting growth companies and prioritising resiliency, adaptability, and pricing power, the fund aims to thrive amidst the complexities of the ever-changing investment landscape.
To find out more about Ian and Ben or the Vanguard collaboration with Baillie Gifford, watch the full interview here.
Should you wish to discuss how your portfolio is positioned in the context of your investment objectives and market risks, please speak to your local BDO Private Wealth adviser.
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