The "Outlier" Investment Art in the New Era of Berky

Since its founding in Edinburgh in 1908, Baillie Gifford has remained distinctive in the field of investment management. Its flagship strategy—the Long Term Global Growth strategy (LTGG)—is now widely known. Launched in February 2004, the LTGG strategy has gone through more than two decades of market tests, establishing its investment philosophy focused on ultra-long cycles and extremely low turnover rates. Its average holding period reaches 10 years, with a turnover rate maintained at about 10%. Over these more than 20 years, Baillie Gifford has delivered outstanding returns. Behind this success is Baillie’s profound insight into and persistent pursuit of “outliers.”

In Baillie Gifford’s investment context, “outliers” are defined as those exceptional companies that can contribute at least fivefold returns to the portfolio over the long term. Growth investing is essentially a game of asymmetric returns: downside is limited while the upside is unlimited.

Outliers have a tremendous impact on portfolio returns. By the end of June 2026, over the 22-year history of LTGG, 17 “outlier” stocks have contributed about two-thirds of the portfolio’s cumulative returns. Among them, three super winners—Nvidia (137x), Amazon (118x), and Tesla (79x)—have achieved astonishing compounding miracles.

If the

This is the return brought by outliers—and what Baillie Gifford excels at. Baillie’s outlier capture rate is three times that of the MSCI World Index, and it approached 9% in the past five years.

Recently, Baillie Gifford and its LTGG strategy have engaged in a series of discussions and reflections on the LTGG approach and considered how to find “outliers” in the new market environment.

Adapting to a Constantly Changing Market Environment

Facing an increasingly complex market environment, Baillie Gifford keeps to its core philosophy while continuously evolving its methodologies to adapt to the new era.

The “Error Management Theory” in evolutionary psychology points out that humans are naturally pessimistic: mistaking a stick in the grass for a snake only brings inconvenience, but mistaking a snake for a stick can be fatal. This loss aversion, combined with the amplification effect of news media on disaster, causes capital markets to be in a long-term state of systemic optimism deficiency. To counteract this cognitive bias, Baillie Gifford systematically embeds “Informed Optimism” into the investment process. Its signature “Ten Questions Stock Research Framework” requires analysts to imagine how a company can become a 5x investment and depict what it might look like in 10 years. During the first half of every stock discussion, negative opinions are even strictly prohibited. For example, as early as 2016, Baillie Gifford projected a $500 billion valuation for Nvidia in blue-sky scenarios, while now it has broken through $5 trillion.

Traditional finance often equates volatility with risk, but Baillie Gifford believes true risk is “permanent capital loss” and “missing long-term structural growth.” In February 2025, AppLovin was subjected to a short attack, causing its share price to plunge 56%. Instead of panicking, Baillie Gifford went back to research for cross-validation and found that the most serious allegations were based on a fundamental misunderstanding of its revenue model by the short sellers. Not only did they hold their position, but they also bought more against the trend. Subsequently, AppLovin’s revenue grew by 84%, EBITDA doubled, and a return of about 3.5x was achieved in a short period. Historical data show that each time LTGG experienced a drawdown of more than 10%, a marked rebound always followed (such as a 55.6% drawdown in 2007–09, and 53.5% from 2021–22).

Baillie Gifford has also made mistakes. In 2022, due to fierce competition and concerns about the metaverse, Baillie Gifford sold Meta—missing its subsequent rapid rise. This lesson demonstrates that quitting too early is the bigger danger, as Meta’s share price quintupled afterward.

Just as the market keeps evolving, so does Baillie’s methodology. First, there is

Secondly, there is

“Outlier” Investing in the Age of Artificial Intelligence

Undoubtedly, in today’s investment environment, artificial intelligence is an opportunity that cannot and must not be missed. But where are the “outliers” in the era of artificial intelligence?

Looking back at historical outliers, whether it was Atlas Copco’s mining equipment or Petrobras’s low-cost oil, their

In the age of artificial intelligence, the core investment issue remains the same: where exactly does scarce capability lie? Which links allow excess returns to persist? Although Nvidia, TSMC, and ASML have already established their positions, Baillie Gifford is still relentlessly searching for the next bottleneck asset that will constrain AI development.

Baillie Gifford believes that investment in this era requires distinguishing between the breadth of the research funnel and the breadth of the investment portfolio. “Casting a wide net” is to broaden research horizons, but does not mean portfolio diversification—turnover remains as low as ever.

Humanoid robots may also be the next potential outlier field. It is expected that by 2050, the global stock of humanoid robots may reach nearly 1 billion units.

The Evolution of Baillie Gifford’s Investment Approach

The evolution of the Baillie Gifford LTGG strategy is a path of “core unchanged, means upgraded.” Its core remains an obsession with capturing outliers, but its methodology is undergoing a comprehensive iteration. “The purpose of broad observation is not broad holdings, but to create more opportunities to apply high-growth thresholds.”

On the mindset level, optimism has shifted from a personal trait to a systematic process. Through enforced optimistic discussions, the Ten Questions Framework, and blue-sky scenario planning, Baillie Gifford has managed to fend off market pessimism. Whether it is AppLovin, Nvidia, or MercadoLibre—which achieved 30% revenue growth for 28 consecutive quarters but saw its stock price fall 40% due to short-term margin compression—the effectiveness of this process is proven. On the risk cognition level, Baillie Gifford has completely abandoned the old view that “volatility equals risk,” establishing the new paradigm that “permanent capital loss is the real risk.” Drawdowns of more than 50% have not resulted in permanent impairment, but have rather marked the beginning of excess returns—while Meta’s lesson has made “quitting too early” a constant warning for the team.

On the methodological front, Baillie Gifford adheres to concentrated holdings, long-term investment, and an outlier orientation, while continually evolving in research depth, geographic reach, and dynamic bottleneck tracking. As Baillie Gifford predicts: “The next great LTGG investment will likely look completely different from those in the past.” In today’s era of world-changing technologies like AI, true long-termism is not passive waiting, but proactively capturing those outliers that change the future—with immense patience, strict discipline, and “informed optimism.”