InvestmentsMar 2 2015

‘I’m not sure anyone always wants to be a fund manager’

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After years of being out of favour Japan has seen something of a resurgence since the election of prime minster Shinzo Abe and his introduction of ‘Abenomics’.

But for Sarah Whitley, head of the Japanese equity team at Baillie Gifford, Japan has always been an interesting story.

She explains: “Even when everybody was not interested in Japan – the Japan is irrelevant thesis that people seemed to develop – there have always been good companies in the country, and the companies have grown. So there has always been something for a growth investor to do in Japan, even though interest in the market has come and gone at various points.”

Japan continues to make headlines, thanks to the unexpected expansion of its quantitative easing programme by the Bank of Japan at the end of October and its snap election in December. The once out-of-favour region is certainly provoking discussion and that’s a good thing, according to Ms Whitley.

“More people around the office are more interested in the [Japanese] companies,” she says. “Post-Abenomics, the [Baillie Gifford Japan] trust is on a premium and we have been issuing shares for the first time in a long time.”

“It hasn’t been transformational but it is nice not to be the pariah, when people say, ‘Japan? Oh you poor thing’,” she smiles.

While some may have viewed Japan as an unpopular area to invest in, Ms Whitley has spent almost her entire career covering the country. She currently runs the £635m Baillie Gifford Japanese fund alongside Matthew Brett, and is sole manager of the £332.4m Baillie Gifford Japan Trust.

She notes: “The investment trust is more my personal portfolio and the open-ended fund is more of a team effort because its portfolio is very much one of the team’s strategy models. What that means is [that] where my colleagues and I disagree, I can express that in the portfolio, and there comes a point where it is good to say, ‘I think this’, ‘I’m doing this’ and ‘We can discuss this six months down the line and see where we get to’.”

Smiling, she adds: “In the times that I’m proved right they always say, ‘You were right’, as if it has never happened before and it is such a surprise.”

But while she enjoys her role, fund management was not necessarily the original plan, noting that after studying experimental psychology at Oxford, “I sort of stumbled on it by a process of elimination”.

She continues: “I’m not sure anyone always wants to be a fund manager, and I think when we’ve interviewed graduates who say they have always wanted to be a fund manager, we might be a little worried.

“We value curiosity about the world, thinking about how things fit together, how things might change; not necessarily people who from an early age have always wanted to be fund managers.”

That said, she acknowledges that she is one of the longest serving people at Baillie Gifford, having joined the firm in 1980 when it was a “small geek firm, the sort of business where a lot of quite clever people were doing things and the business was only really there to pay people a salary”.

Starting life in a couple of Georgian townhouses in Edinburgh, Ms Whitley recalls the business was very different compared to the firm that now employs approximately 850 people with assets of £105bn.

“But the core of it is the same, in terms of thinking about the companies you’re investing in,” adds the manager.

“I joined from university and like a lot of people that joined when the firm wasn’t that big and wasn’t that serious, I thought it would be a fantastic training, then life will get serious and I’ll go somewhere else. Then the firm evolved and became serious itself and became a proper business. So it’s changed a little bit,” she laughs.

Starting as a graduate trainee in the early 1980s, then, as now, Ms Whitley rotated around the different desks, spending a year with the UK team and then the US desk, before switching to what was then known as the Far East team.

“I sort of stuck there really. I started doing that in October 1982, which was one of the major market lows and life became interesting, and then there was the bubble in the late 1980s in Japan,” she says.

Macroeconomic themes have obviously played a big part in the Japan story, but Ms Whitley points out the team does not comprise macro investors. Although she acknowledges that “with the yen strengthening and the broad bits of the domestic economy picking up, that does affect the companies and part of our investment process is to look at the industry background and that is obviously affected by the macro. But it is not really what is driving our process.”

Aside from running the Japanese desk and the two Japan vehicles, she also chairs the company’s sponsorship and charity committee, which has two strands to it.

Ms Whitley explains that the charitable side of her job involves her targeting causes closer to home, so instead of major elite sports sponsorship Baillie Gifford supports grassroots pursuits and smaller charities, including an annual charity chosen by its staff. It also supports the arts, including one big exhibition a year in Edinburgh, the Edinburgh International Book Festival and, “where we think they’re good enough, [we support] some of the national companies such as the Scottish Ballet and Scottish Opera”.

But she adds: “For our main charitable giving we give a largish amount of money to Foundation Scotland, which is a community foundation. It disperses that money to small organisations – things that have charitable objectives but aren’t technically charities. We try not to constrain the criteria, but instead say, ‘Tell us what you’ve awarded money to and if we don’t feel that’s right then we’ll tell you’.”

“So it is lots of spending of other people’s money on good causes,” she jokes. “But you can either institutionalise it and have a desk of five people full time or we can do it as it is, [where] there is no need for that kind of infrastructure, although that might change when I retire.”

Not that retirement is on her mind anytime soon, but while her numerous roles at Baillie Gifford keep her busy, she is more than happy to switch off and leave things in the hands of her colleagues.

“I’m very good at leaving that sort of thing behind and not looking at it on holiday. I think [if] you have highly able, highly paid colleagues, [then] when you go on holiday they should be dealing with everything. There would obviously be some things you’d like to know before you come back from holiday, but not day-to-day, ‘We have had this much inflow for this fund and so on…’”

The firm’s charitable support for grassroots sport is reflected in Ms Whitley’s own role as a rowing coach for her local boat club. “I rowed at university and rowed once I got to Edinburgh and then stopped when I had children. But, in a very minor way, one of the things I’ve been involved in for the past five years is developing a junior section at our boat club and doing some coaching.”

“So it’s never a dull moment,” she smiles.

CV

Sarah Whitley

2007 – present

Manager of the Japanese fund, Baillie Gifford

2001 – present

Head of Baillie Gifford’s Japanese equity team

1986 – present

Partner, Baillie Gifford

1982 – present

Manager, Baillie Gifford Japan Trust

1980 – 1981

Graduate trainee, Baillie Gifford

1980

Graduated with a BA in experimental psychology, University of Oxford