Baillie Gifford US Growth (USA)

Baillie Gifford US Growth (USA) aims to provide exposure to the most exciting growth companies in the US across both public and private markets. When building the Portfolio, managers Gary Robinson and Kirsty Gibson focus on businesses that address large market opportunities, benefit from enduring and sustainable competitive advantages, and operate with cultures that foster a long-term vision, characteristics they regard as hallmarks of strong growth potential.

The duo also tend to focus on companies that are well positioned to benefit from significant structural changes, which they refer to as ‘sources of demand’. This includes, for example, the ‘digital transformation of commerce’, represented by holdings such as Shopify, a company providing software tools that enable merchants to easily set up and manage their businesses. Another example of a source of demand is ‘content consumers will pay for’, exemplified by holdings such as the language learning platform Duolingo.

USA’s all-out growth approach has been rewarded over the past 12 months, with the trust comfortably outperforming both the S&P 500 Index and the AIC North America sector’s weighted average return. However, the trust struggled in 2021 and 2022 amid a period of surging inflation and rising interest rates, which is weighing on USA’s five-year Performance numbers. In fact, the elevated volatility exhibited by the portfolio during these years prompted the introduction of guardrails designed to help prevent such extreme outcomes in future.

It is also worth noting that activist investor Saba Capital currently holds c. 30% of the voting rights in USA. While Saba has not taken further action since its resolution to replace the trust’s board was defeated in February, its intentions remain unclear, and further activism to realise its investment cannot be ruled out.