06 Jul 2011 | Duncan Robertson

Global Opportunities 

With the UK economy currently struggling to accelerate out of the recession in the same way Germany has, and with the much discussed age of austerity only really now kicking in, many investors are continuing to eye up the opportunities presented by markets outwith the UK.

China, now the world’s second largest economy having overtaken Japan in 2010, is such a market where growth has been drastic – GDP has risen nearly 30-fold in 30 years. At this rate, China is expected to overtake the US economy by 2016. Further the other BRIC nations, the phrase famously coined by Goldman Sachs to describe Brazil, Russia, India and China, are also seeing strong growth. However as with any investment, risk is involved. Concerns still remain over issues such as government interference, infrastructure bottlenecks and, most recently, the likely rise in food prices and commodities.

In order to access these opportunities Baillie Gifford offers four truly global investment trusts, providing exposure to global markets at low cost. Our flagship trust, Scottish Mortgage, has 27% exposure to emerging markets, with 13.5% in China.
 
It has not always been the case that Scottish Mortgage has been so resolutely global. Previously it held stocks in big British listed companies with 41% of the fund invested in UK listed companies in 2005 compared to 10.1% in 2011.

While the prospects of emerging markets, and more specifically China, deserve recognition in the conventional macro manner Scottish Mortgage’s change in position reflects a changing world where opportunities can be found throughout the globe based on themes rather than geography. One such theme for Scottish Mortgage is the rapid development of technology in areas such as genetics, robotics and nanotechnology. This exponential change means that geography may eventually become relatively meaningless

The story is clear that while the UK economy may not be bounding along at the moment, despite the coalition government’s best efforts, there is still much opportunity and winners to develop a successful and profitable portfolio globally.

Please remember that changing stock market conditions and currency exchange rates will affect the value of investments and any income from them. Investors may not get back the amount originally invested.

When investment trusts invest in emerging markets, difficulties in dealing, settlement and custody could arise, resulting in a negative impact on the value of your investment.