THE collapse of share prices in 2001-02 was a baptism of fire for James Anderson, the fund manager who runs the £1.6 billion portfolio at Scottish Mortgage Investment Trust, part of Baillie Gifford, Scotland’s leading independent investment manager.

He says: “When the tech bubble burst, we changed our strategy to be much more active, globalised and absolutely bottom-up in our stock selection. I think hard before we buy or sell.”

Mr Anderson’s goal is to maximise total return — the sum of share price growth plus dividends — through a diversified portfolio in the UK and in international markets.

Scottish Mortgage has 95 stocks in its portfolio, of which 40 per cent are large-capitalisation blue chips. The largest holdings include Vodafone, Royal Bank of Scotland, Brazil’s Petrobras Distribuidora and Korea’s Samsung Electronics, alongside British American Tobacco, GlaxoSmithKline and, in the US, Eog Resources and Golden West Financial Corporation. Its shares are cheap, trading at an 18 per cent discount to the fund’s net asset value, but Mr Anderson is cheerful.

Once a good prospect is identified, Mr Anderson and his team of four — who are backed in primary research by 70 or so investment staff at Baillie Gifford — look twice before they buy. They write up the case for purchase and simultaneously argue the contrary case for sale. They buy only if the former is more compelling than the latter, thus hoping to avoid biases and mistakes.

When mistakes are made in large collective funds that have turnover of typically

50 per cent plus, it is all too easy for the fund managers to avoid acknowledging them. But Mr Anderson tries to keep turnover at Scottish Mortgage below 30 per cent and his target is 20 per cent.

“There is huge market inefficiency because investors are so short-term. We believe that patience is an advantage, so we will wait for rewards on holding a good share but will not sit on a mistake.”

Mr Anderson sees buying opportunities in fallen angels among large-cap stocks that were once on glamorous ratings because of their superior growth. He cites eBay as an example. At the worst point, the market took down its shares by 50 per cent because it had missed its estimated results in just one quarter after investing in China.

Mr Anderson argues: “EBay spends between $400 million (£219 million) and $500 million a year in capital expenditure while Wal-Mart, the world’s largest retailer, spends $10 billion. Take Amazon, another unfashionable former glamour stock. It turns its stock 20 times a year and gets paid within 40 days. It’s a great business.”

He is too wise to predict the short-term movement of share markets, but he does think that we have reached a tipping point in globalisation when so-called emerging markets such as China, India and Russia are punching above their weight in terms of the impact that they are having on world economic growth.

He argues that the domicile of the world’s best businesses is irrelevant when it comes to assessing risk. “Are shares of Korean companies more risky than those of American ones? Not if you are holding Samsung, which we believe is the best in world class.”

Scottish Mortgage’s long position in tobacco companies is another example of Mr Anderson’s addiction to a rich blend of long-term cashflow growth in a business where there is no ease of entry. The ban on advertising cigarettes has resulted in torrents of cash falling straight into dividends.

Predicting currency movements and their consequences is a mug’s game, he says. But he notes that corporate profits have been “terrific” regardless of geographical location.

At this time, when shares traditionally fall along with the leaves, and stormy skies hang over markets as investors ponder the impact of high oil, I am buying into Mr Anderson’s Scottish Mortgage at 401p, knowing that the cheaper good shares become worldwide, the more cheerful he will be and the more money he will make for me.