How the investment trusts with pre-IPO Anthropic exposure differ

There are currently four investment trusts which already have a stake in AI giant Anthropic: Baillie Gifford US Growth, RIT Capital Partners, Schiehallion Fund and Scottish Mortgage. This' particularly relevant to investors right now because the Claude creator is rumoured to be making its public stock market debut later this year, and is tipped in some quarters to take the title for biggest IPO from SpaceX.

The Baillie Gifford cohort

Four out of the three trusts are run by Scottish firm Baillie Gifford, which has a long pedigree of investing in public and private companies. While all of their trusts are independent, they’re built on the Baillie Gifford DNA, which is focused on finding ‘exceptional growth opportunities’, something they call ‘Actual Investing’, which is based on the premise that just a handful of companies generate the majority of market returns.

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This bias to growth investing has seen the firm’s suite of funds struggle during periods of higher inflation and interest rates, but have thrived during the tech rallies. Technology as a sector makes up around 60% of Scottish Mortgage, the US Growth fund and Schiehallion.

Investing in the same investment style lends to a fair share of crossover between their 30-40 holdings, a phenomena AJ Bell examined in the context of analysing investment decisions on funds.

All three Baillie Gifford trusts have a concentrated approach, with a focus on growth, and this has taken them into some of the biggest stock market stories of the past few decades. All three were pre-IPO investors in SpaceX, and it remains a top holding. Scottish Mortgage bought in seven years ago with $200 million, a stake now worth $5 billion, a 25 times multiple on their original investment.

While there’s a lot of similarity in terms of investment thesis, how these three trusts go about achieving their returns is quite distinct.

Schiehallion can only invest in private companies, meanwhile Scottish Mortgage and Baillie Gifford US Growth can buy both listed and unlisted names, within certain limits.

Scottish Mortgage is capped at around 30% of the portfolio in private stocks with some wiggle room on a case-by-case basis, while Baillie Gifford US Growth is capped at 50%.

Scottish Mortgage is one of the most well-known investment trusts globally and a favourite among AJ Bell DIY investors and can invest in any market anywhere, primarily searching for big global growth outliers.

Schiehallion is also a global fund but its purpose is to invest in later-stage private companies that have not yet listed but may eventually IPO.

Baillie Gifford US Growth is, as its name suggests, a single region portfolio, only investing in US companies, and takes a higher exposure to earlier-stage stocks than Scottish Mortgage will.

It’s worth noting that Baillie Gifford US Growth is currently embroiled in a battle with activist shareholder Saba Capital, which has called for a change to the board and investment process several times.

RIT Capital Partners

Breaking up the Scottish cohort is RIT Capital Partners, which was founded by the Rothschild family and has been run by a non-insider, Maggie Fanari, for the past four years.

While the Baillie Gifford trusts are more focused on trying to find the next Anthropic and SpaceX's of the world, RIT Capital is trying to preserve and compound investors’ capital across various market cycles.

It’s the most defensive portfolio out of the four because while it can also invest in public and private companies it's a multi-asset trust, so it also holds bonds, real assets, hedge funds and absolute return vehicles.

RIT splits its portfolio into three pots, the public equities and private assets, and what it calls 'uncorrelated strategies'. This is a key differentiator between RIT and the Scottish trusts because here Fanari isn’t choosing all the positions on her own, rather the trust will invest in other portfolios and allocate to what they call ‘exceptional managers’ in a hybrid approach in order to ensure RIT has access to what it feels is the best external talent available. The Baillie Gifford teams will rely heavily on its broad in-house expertise as part of its investment process too; but the respective fund managers only invest in companies not other funds.

RIT was also a pre-IPO SpaceX investor, so operates in this similar sphere as the aforementioned funds with stakes in Databricks, Stripe and several other hotly tipped IPO candidates. It's also heavily invested in the US, something all four trusts have in common.

While these trusts offer a means of getting early exposure to Anthropic, buying any fund should involve looking at them in the round rather than just focusing on a single stock in their portfolio.