Baillie Gifford

Japan, once a global leader in technology and innovation during the 1980s and 1990s, has faced relative stagnation in recent decades. Nevertheless, the country still offers untapped potential for growth investors, according to Donald Farquharson, Japan specialist at Baillie Gifford.

Fund portfolios with allocations to the U.S. producer of next-generation artificial intelligence chips were at their concentration limits before the stock on Monday gave up some more of its spectacular recent gains.

Investors often overlook the growth potential of companies exposed to megatrends like the energy transition and artificial intelligence. Those who discern the transformative potential early and stay invested might reap significant returns in the next decade.

Pension funds are keen for asset managers to increase allocations to India, some advocating for a 20% allocation in their emerging markets portfolio. India’s growth trajectory could potentially eclipse China’s, given its focus on the service sector rather than manufacturing. At its European Media Forum on Friday, Edinburgh-based Baillie Gifford also acknowledged burgeoning opportunities in Latin America and Indonesia, particularly due to the increasing connectivity and the unfolding global energy transition.

As pressure mounts on investors to allocate larger portions of their portfolios to alternatives, Stuart Dunbar, a partner and director at Edinburgh-based investment manager Baillie Gifford, stresses the need for careful consideration. He highlights the limited supply of high-quality opportunities as a critical factor. “We can’t just rush into the alternatives.”

Rising interest rates and continuing tension surrounding the Ukraine conflict have brought the issuance of high-yield corporate bonds in Europe to a virtual standstill. “The size and speed of the current interest rate increase is causing companies to stop going public and the market to virtually dry up,” said one specialist.