Fund house giant Baillie Gifford has set its sights on income investors in a step away from its typical focus on growth and accumulation.
Jan Oliver, a partner at Baillie Gifford responsible for income strategies, told FTAdviser the asset manager was widening its focus to include both growth for clients in accumulation and in decumulation.
As part of this, the company is launching an Income Leadership Group to look into fixed income and equity income solutions.
Ms Oliver said: “Baillie Gifford is typically known for accumulating wealth and building up assets, whether it’s for defined benefit pension schemes or private clients through advisers.
“We’re not really well known for fixed income or income solutions – but we’re changing that with the creation of our Income Leadership Group.”
She said the fund house wanted to ensure clients and schemes did not move away from Baillie Gifford when moving into the ‘income’ stage of their life, adding she hoped the growth and income factions would be “building blocks we can mix together” to cater for a client their whole lives.
Income funds make up just a third of Baillie Gifford’s 37-strong fund list, with four equity income funds and eight fixed income funds.
In 2010, Baillie Gifford restructured its £6m UK Income fund from a UK to a global fund – the BG Global Equity Income fund - after the fund had lost significant assets under management, dropping from £20m to £6m before the restructure.
But in the past two years, Baillie Gifford has launched its Responsible Global Equity Income fund and the Multi-Asset Income fund.
The move towards income was fundamentally driven by the changing demands of Baillie Gifford’s clients, she added.
Adviser’s clients were also primarily in the age bracket where they needed to start receiving an income from their investments, Ms Oliver added.
“In terms of equities, we’re looking for companies which provide a sustainable income but will also grow their share price. But we’re also looking at other sorts of investments such as emerging market debt, structured financials, infrastructure and real estate investment trusts.”
Paul Stocks, financial services director at Dobson and Hodge, said: “Having funds in a portfolio geared towards income enables an extra level of diversification beyond simple asset allocations and a ‘cash buffer’.”
Ms Oliver said the cause of Baillie Gifford’s move into income primarily stemmed from pension freedoms back in 2015.
Pension freedom rules mean those aged over 55 no longer have to purchase an annuity to access their pension income but instead also have the choice to enter drawdown or take a cash amount.
Data from HMRC last month (January 30) showed almost £33bn had been withdrawn from schemes since the introduction of the freedoms.
Ms Oliver said: “If people are going to live for 35 years in retirement and have more freedom over their pension pots, they need to invest more money to maintain its purchasing power and to provide an income.”
imogen.tew@ft.com
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