Baillie Gifford UK Growth

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%.