Edinburgh Worldwide Investment Trust Plc (EWI)

Why we like the fund: The fund invests in smaller companies across the world. Although it aims to invest primarily in listed companies, it can also invest in private companies (up to 25% of the fund). Baillie Gifford, which manages the trust, is an experienced ‘growth’ investor, but with a key differentiator. Like other growth investors, it invests in companies with higher-than-average growth rates, but it is more aggressive in pursuing this goal. It looks for a handful of mould-breaking companies that will disrupt an industry and eventually become long-term winners, often run by entrepreneurs. This is a risky way to invest, but the managers across the firm have done so successfully. How to use the fund: This fund is an investment trust, which gives the fund manager more tools than they would have with an open-ended fund. For example, it can borrow money to invest, and it does (albeit fairly modest amounts). It also owns less-liquid investments, like smaller and private companies, which is something an investment trust can do more comfortably because liquidity is easier to manage. This fund often invests in companies with excellent promise and potential for high future earnings, but because they are smaller companies the risk is greater. This fund is a useful addition to a diversified portfolio for investors with a ten-year plus time horizon, who are willing to take high levels of risk in the hope of greater returns.