Baillie Gifford  

Baillie Gifford to monitor single fund after value assessment

Baillie Gifford to monitor single fund after value assessment

Baillie Gifford has outlined just one fund requiring monitoring in its annual value assessment report.

In the 63-page report, released today (July 30), Baillie Gifford said all its 35 funds provided investors with value relative to the funds’ index and performance targets.

But the fund house was warned the past 12 months had been an unusual period which, from a performance perspective, was "unlikely to be matched".

It added that many of the portfolios had been positioned for growth over periods of five years or more and were on track to achieve their individual objectives when the pandemic struck - which created a “new dynamic” and appears to have accelerated some trends.

“This has been positive for performance in many cases,” the report said.

However it highlighted that it had taken action in respect of the Baillie Gifford Emerging Markets Bond fund and would be monitoring it - though it maintained the fund still provided value.

The fund, which aims to outperform the JP Morgan GBI-EM Global Diversified Index, underperformed its target over the three years to March 31 this year, recording an annualised 2.1 per cent fall against a 0.2 per cent decline in the index. 

Baillie Gifford said changes to the investment process were implemented in 2019 and the team has been strengthened, leading to the fund exceeding its target over the past 12 months, returning 3.6 per cent compared with the target of 2.2 per cent.

Dean Buckley and Kate Solsover, non-executive directors said that this has been an excellent year for the firm.

“Performance across its range of equity funds has been incredibly strong and we have noted an improvement in performance for those funds which were marked as amber in last year’s value assessment. 

They added: “We challenged ourselves to find a reason to award more amber or red ratings but failed. However, the strength in the share prices of the growth companies in which Baillie Gifford invests is unlikely to be repeated in the coming year. 

“Accordingly, both the board and we would suggest that this has been an unusual year in very many ways and, in performance terms, is unlikely to be matched.”

The results of the value assessment are in contrast to the previous year’s report, in which the firm shut down its two active gilt funds after it discovered the portfolios were not providing value to investors.

The giant fund house’s report showed its Active Gilt Investment and Active Long Gilt Investment funds had underperformed their respective indices and targets over the past three years, prompting Baillie Gifford to close the portfolios in March this year.

As part of the Financial Conduct Authority’s asset management review, fund houses are now required to carry out an annual assessment of whether the firm provides value for their clients.

The value rules — which have been in effect since the start of 2020 — require asset managers to look at their performance, costs, economies of scale, comparable market rates, services and share classes.