Baillie Gifford European Growth (BGEU)

Baillie Gifford European Growth (BGEU) invests in European growth businesses in a focused portfolio of 30–40 stocks. Manager Joe Faraday was appointed in April 2026 and he has made a material change to the portfolio, notably adding growth companies from sectors that BGEU has historically been light in, such as energy, banks, holding companies and industrial franchises, where he sees multiple opportunities to find different sources of returns. BGEU invests all the way from fast-growing companies to established global businesses that can reinvest and compound over many years and, selectively, in private companies. This is a key part of its strategy that provides access to companies that can grow significantly before listing on a stock market.

Joe’s starting point in assessing each holding is a carefully defined set of questions and beliefs under the headings of growth, quality, management, sustainability and valuation. We look at these in more detail in the Portfolio section. In the same section we also look at examples of new and retained holdings, and at how the sector exposure has changed since Joe was appointed. Joe recognises that companies and sectors in Europe have evolved and, for example, consolidation in the banking industry has created much larger, higher quality businesses that can now sit alongside more traditional growth areas such as technology in a diversified portfolio.

Over the last five years BGEU’s NAV and share price total returns are -14% and -21% compared to the FTSE World Europe ex UK Index’s total return of 58%. More recently, over one year, BGEU’s NAV and share price total returns are 13% and 12%, with the index’s return c. 21%. The BGEU board has acknowledged this underperformance and has assessed that Joe’s appointment and revised approach to growth investing is the most effective way to address this. The board has also made active use of share buybacks, examined in the Discount section, and introduced a performance-related tender.