Baillie Gifford UK Growth Trust
Company Notes
Steadfast managers confident in fundamentals
Background: Baillie Gifford UK Growth* (BGUK) aims to provide capital growth in excess of the FTSE All Share Index by investing in a concentrated ‘best ideas’ portfolio of UK equities. The fund has been managed by Iain McCombie and Milena Mileva since June 2018, when Baillie Gifford assumed responsibility for the fund. The managers employ a bottom-up approach and stock selection is based on fundamental analysis, with a bias towards high-growth quality businesses. Investments are made on a long-term view, with a five-year investment horizon. We met with co-portfolio manager Milena Mileva on 19 June 2023.
Portfolio: The portfolio contains 45 stocks and the active share relative to the benchmark, the FTSE All Share Index, was 85% as at 30 June. Up to 10% of net assets can be invested in private companies, but only one (Wayve Technologies, 0.2% as at 31 May) is currently held. Portfolio turnover for the financial year to 30 April 2023 was low at 5%, implying an average holding period of 20 years. Key active sector weights include an overweight allocation to Industrials (+19% as at 30 April) and underweight exposure to Consumer Staples (-12%) and Energy (-11%).
Performance: Since Baillie Gifford took over the management of the fund on 30 June 2018, BGUK has delivered a NAV total return of +0.7%, notably underperforming the +15.5% return of the FTSE All Share as well as the +14.8% return of the UK All Companies peer group. The fund performed strongly in 2020, as growth stocks rallied in the wake of the pandemic, but subsequent performance has been weaker in a rising interest rate and inflationary environment.
*Denotes a corporate broking client of Winterflood Securities
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