Once celebrated for its early identification of Tesla shares, a Scottish fund boutique is now channeling its investments into Switzerland's largest bank – unambiguously signaling its ambitious strategy.

Baillie Gifford has a reputation for having a special instinct for lucrative shares. The fund management company invested in Tesla, the American manufacturer of electric cars, back in 2013, before the first vehicle had even left the ramp.

A similar situation prevailed with Elon Musk's other venture: the Space X space project. The Scottish fund manager also invested in this company at a very early stage. 

At times, Baillie Gifford was one of Tesla's largest external owners, with 7.7 percent of the shares. The stake has since fallen below 1 percent.

Looking for companies with significant potential for growth

This is not atypical for the fund management company. «We look for companies that show significant potential for growth. Tesla reached a peak in 2022. That's why we reduced our stake,» says Stuart Dunbar partner at Baillie Gifford.

UBS appears to be a promising investment, so Baillie Gifford has now joined the combined major bank, as Head of Switzerland Anna Bretschneider explains.

«UBS is a leader in wealth management and offers its clients a high-quality service. This makes the bank attractive to us,» she says. In addition, the big bank will be undergoing a generational change in the coming years with CEO Sergio Ermotti and Chairman Colm Kelleher. «As a shareholder, we will of course monitor what impact it will have,» she says.

Debate about new capital rules plays no role 

By contrast, the debate surrounding new capital rules for systemically important banks does not play a decisive role. «We are of course aware of the discussion, but it is not decisive for us. From a long-term perspective, UBS is a solid and promising investment for us,» emphasizes Bretschneider.

A long-term horizon

Accepting uncertainties and being open to the fact that you can sometimes be wrong - all this is part of Baillie Gifford's self-image. In the case of Nestlé, where the Scots have held a firm position for a long time and have not been rattled by the recent turbulence, they have demonstrated the first of these qualities. Sell shares? Not necessarily. «We always have a long-term horizon. In our eyes, five years is more of a short-term time frame,» says Dunbar.