Baillie Gifford's UK Growth Trust saw its net asset value per share lag behind its index in the six months to October after its investments were impacted by supply chain disruptions and it failed to benefit from rising oil prices.
In a statement to the stock exchange today (November 26), the trust said its Nav increased by 2.8 per cent, compared with the FTSE All-Share Index rising 5.4 per cent over the same period.
The share price over the six months fell by 5.6 per cent on a total return basis as the shares moved from a premium of 2.8 per cent to the Nav per share to a discount of 5.6 per cent.
But the firm said it doesn’t “agonise (or crow)” over short term performance, and still believes in the potential of its portfolio.
The trust’s managers, Iain McCombie and Milena Mileva said: “Although the Covid-19 pandemic backdrop is unprecedented, such periods of underperformance for growth investors in the UK are not unusual in our experience and does not concern us unduly.
“Never forget that disruption and dislocation present opportunities for nimble and far sighted management teams and it usually takes time for this to be widely recognised.”
Since taking on management of the portfolio, formerly the Schroder UK Growth trust, at the end of June 2018, the trust's Nav is up 23.5 per cent, the share price 25.7 per cent and the FTSE All-Share Index 10.6 per cent on a total return basis.
The firm said its main detractors over the period included online fashion-retailer Boohoo, which it said had been impacted by supply chain issues. Renishaw, the founders of which were unable to find a buyer, and Lancashire Holdings, which announced higher than expected storm losses, were also mentioned.
But the managers said it was important to frame these issues in the context of its long-term approach, and although Boohoo had been impacted by heightened freight costs, the pandemic had “only reinforced” the divide between the “structural winners and losers” in the online retail sector.
“We think Boohoo is resolutely in the former camp.”
The trust said it was also impacted by not owning any major oil stocks in the period. Oil prices have risen 60 per cent over the past year, and earlier this week the US announced it would release 2.5 days worth of oil from its reserves in an attempt to drive down the price.
The trust’s managers addressed concerns around the “rising spectre” of inflation, saying although their investment style was bottom up, they were “alert to the potential for a major change in conditions and try to incorporate that as part of our deliberations on individual companies.”
sally.hickey@ft.com
