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Fund Profile

Baillie Gifford UK Growth 11 March 2019

Disclaimer

This is a non-independent marketing communication commissioned by Baillie Gifford. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

Overview
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Overview

Baillie Gifford UK Growth is a quality growth portfolio with a highly active, long-term approach. The trust was taken over from Schroders in June 2018 and completely overhauled, with 42 new holdings purchased and all but a few small inherited positions sold.

Managed by Iain McCombie and Milena Mileva, the aim is to identify companies with the best long-term growth prospects without reference to the index, and to hold for a minimum of five years. The portfolio is well represented in the technology, financials and consumer-facing sectors, and light on banks, oil and gas and defensives such as healthcare and tobacco.

The intention is to run structural gearing of 10% in the long run, and the managers will build this up as the opportunities arise.

NAV performance has been behind the index in the short period since the handover as growth companies have retrenched relative to cheaper stocks. However, following the award of the mandate to Baillie Gifford, the discount has come in considerably from an average double digit discount in the previous three years, to the current level of 5.3%, which compares to an AIC UK All Companies sector average of 8.5%.

With the new managers focusing on growth first and foremost, the dividend has been cut. The board has guided that there will be a stepped cut to the dividend, and the interim was half last year’s. The historic yield is 2.5%.

Kepler View

It is an unfortunate irony that Baillie Gifford’s style has become a headwind just as the decision to change manager was taken. However, we would caution that six months is a very short time period and says nothing about the prospects of the company over the longer run. Baillie Gifford’s highly active, long holding period approach is supported by academic research as being linked to alpha generation, and the success of Scottish Mortgage shows what can be achieved on a global stage. It may seem counter-intuitive to buy into the UK for growth given all the negativity in the headlines around Brexit, but we share the managers’ conviction that the UK has plenty of world class companies and would suggest that buying when they are out of favour should be advantageous in the long run.

Bull Bear
A long term, active approach Structural gearing and a high growth style could underperform in down markets
High allocations to companies in secular growth areas such as technology Recent underperformance doesn’t give the new mandate the best start
A team approach which uses the combined insights of experienced and successful UK and global teams The dividend is unlikely to satisfy income seekers
Continue to Portfolio

Fund History

13 Oct 2023 Baillie Gifford UK Growth Trust manager insights
Investment manager Milena Mileva shares an annual update on the portfolio, reflecting on the market environment, performance and turnover, and opportunities for holdings...
18 Aug 2023 UK Equities: A fantastic hunting ground for long-term growth investors
In this webinar, Milena Mileva, co-manager of the Baillie Gifford UK Growth Trust plc, dispelled some myths about investing in the UK equity market, and explained why it's an excellent opportunity for long-term growth investors...
04 Nov 2022 Baillie Gifford UK Growth Trust: long term growth opportunities in the UK
In this webinar, co-managers Iain McCombie and Milena Mileva discuss the key traits of their long-term investing philosophy...
28 Oct 2022 Why the best innovation is in our backyard
UK innovation has a part to play in ridding the world of some of its most stubborn problems, Milena Mileva, joint manager of Baillie Gifford UK Growth Trust, explains more...
23 Sep 2022 Baillie Gifford UK Growth Trust - Manager Insights
In this short film, investment manager Iain McCombie discusses changes to the portfolio, the impact of inflation on growth stocks, and why there are grounds to be optimistic during periods of volatility...
17 Sep 2021 Baillie Gifford UK Growth Trust - Manager Insights
Investment manager Milena Mileva gives an update on the philosophy, positioning and activity of the Baillie Gifford UK Growth Trust portfolio...
19 May 2021 Take-Off Platforms
Online trading platforms have transformed the way we put our money to work. Iain McCombie, joint manager of the Baillie Gifford UK Growth Fund explains how these companies brought financial power to the people...
07 May 2021 Baillie Gifford UK Growth Fund PLC – Webinar
Anzelm Cydzik talks to investment managers of the Baillie Gifford UK Growth Fund Milena Mileva and Iain McCombie. They discuss the key traits of their long-term investment philosophy, current portfolio positioning and the importance of resisting temptation to trade too often. Capital at risk.
23 Apr 2020 Fund Analysis
BGUK has shown the ability to outperform in both rising and falling markets…
26 Dec 2019 Fashion retailers - the impact of online shopping
The idea that online shopping is destroying bricks-and-mortar retail stores is a popular one and it’s an easy charge to make. But, in this podcast investment manager Milena Mileva argues that it’s a simplistic narrative that doesn’t begin to tell you the whole story...
11 Mar 2019 Fund Analysis
Baillie Gifford UK Growth is a quality growth portfolio with a highly active, long-term approach...
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