The four areas ripe for disruption

The next decade will be the “best period for growth” according to Vanguard as there are four areas which are yet to benefit from disruption.

In a webinar, Helen Xiong, portfolio manager at Baillie Gifford, which managed Vanguard’s Active Global Growth fund, said disruption had so far been confined to four areas.

“The next decade will be one of the best periods for growth investor because, if you look back, only a handful of industries have been disrupted in a major way and that’s retail, advertising and the media,” Xiong said.

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“But there are broader areas of the economy, whether that’s healthcare, energy, finance or education that haven’t been really disrupted. We think those industries will look very different in a decade from now so the opportunity set for growth investors has never been so diverse.”

The three-largest sector allocations in the fund were consumer discretionary (19.5%), information technology (16.3%) and healthcare (15.1%).

Xiong and her colleague, Kieran Murray, senior analyst for research and engagement, said the fund did regular audits into environmental, social and governance (ESG) issues in the portfolio.

“We do regular audits on the portfolio on issues such as corporate tax, we want to do one on corporate welfare and we’ve just done one on climate change and trying to assess the climate strategy of the stocks across the portfolio,” Murray said.

“What that allows us to do is identify leaders and laggards and instruct our engagement with those companies.

“Laggards would be those companies where there’s no disclosure, where they are operating in an environment with significant volatility or where there’s transition or physical risks.”

He said clients were increasingly asking for more ESG information and quantitative data but that were limitations on how much could be measured as there was no “standard cookie cutter approach” because there were so many nuances.

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