Multi-asset  

Baillie Gifford in low volatility multi-asset growth fund offering

Edinburgh-based investment management firm Baillie Gifford has launched a new product which aims to achieve lower volatility than traditional equity markets to sit alongside its suite of multi-asset funds.

The new fund, called the Baillie Gifford Multi Asset Growth Fund, targets annual returns of 3.5 per cent ahead of UK base rates, net of fees and with annualised volatility of less than 10 per cent over rolling five-year periods.

The fund, established as a UK authorised non-Ucits retail scheme, is managed by Baillie Gifford’s multi-asset team, manager of a £5.9bn Diversified Growth Fund which closed to new investors in February 2013.

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According to FE Analytics statistics, the Diversified Growth Fund returned just over 20 per cent over the past five years.

The new product can invest in a range of asset classes including gold, investment grade bonds, developed market government bonds, index-linked bonds and cash.

According to the fund’s literature, there is no fixed asset allocation benchmark, but there are limits on the maximum exposure to individual asset classes in order to control risk.

The fund house will be hosting a number of roadshows about the new funds from 7 June to 23 June 2016.

Provider view

Patrick Edwardson, head of the multi-asset team, says: “Many investors are turning to multi-asset approaches to deliver attractive returns with lower volatility. We do multi-asset investing really well at Baillie Gifford. You can see that with our Diversified Growth Fund and the same people who manage that are applying the same process to our new Multi Asset Growth Fund. We think it’s a really good investment approach and the new fund should be very successful.”

Adviser view

Ricky Chan, director and IFA at London-based IFS Wealth & Pensions Ltd, said: “I have seen an increase in the number of multi-asset fund launches in recent times. I think these types of funds are targeted to advisers who are seeking to outsource their investment research proposition. For smaller practices it might be more practical to find a fund that suits a client’s attitude to risk by outsourcing the process.”

He added: “It is hard not to pay attention when a large investment house like Baillie Gifford announces a new fund. They have obviously done their own research and identified a gap in the market.”

Charges

The ongoing charges figure for B accumulation shares is 0.60 per cent; the annual management charge on B class shares is 0.50 per cent.

Verdict

Recent history has seen a proliferation of new or ‘new and improved’ multi-asset strategy launches – at a time of heightened market volatility and less than stellar bond returns. The strategy may suit those seeking to invest over the long-term but are unable to stomach the risk associated with a fund with sole exposure to one asset class.

It is difficult to ignore Baillie Gifford’s clout in the investment sphere and the new fund is likely to draw attention from intermediaries. The fact that the fund is managed by the same team responsible with a good and recent record of producing good returns – albeit for a different product - will go some way to reassuring investors that their money is in capable hands.