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Baillie Gifford Managed Fund - added to Wealth 150

Richard Troue | Mon 19 January 2015

Investments can go down as well as up so there is always a danger that you could get back less than you invest. Nothing here is personalised advice, if unsure you should seek advice.

The Baillie Gifford Managed Fund has been added to the Wealth 150 list of our favourite funds across the major sectors.

The fund is managed using a team-based approach and invests globally in shares, bonds and cash, with a different manager responsible for selecting stocks in each region. Steven Hay and Iain McCombie then have responsibility for deciding the overall asset allocation of the portfolio, taking into consideration their view of the wider economic environment. The current fund manager line-up is as follows:

Manager name Region
Iain McCombie UK equities
Tom Coutts European equities
Helen Xiong US equities
Iain Campbell Developed Asian equities
Andrew Stobart Emerging markets
Steven Hay Fixed income

Each manager has the support of a larger team and they use a collaborative approach to identify companies they believe enjoy a sustainable competitive advantage in their industries; and which are capable of growing earnings and cash flows strongly. The fund invests predominantly in individual shares and uses some Baillie Gifford managed funds for fixed-interest and emerging market exposure.

One example of a stock recently added to the portfolio is Oracle, a leading supplier of database software. The team cites a significantly improved product offering and a stable revenue stream as key reasons for being positive. They have also added to their investment in Burberry, the high-end clothing brand, believing it could capitalise on opportunities in faster-growing Asian and emerging markets.

The fund tends to have a bias towards shares (the sector rules stipulate the fund must hold 40% to 85% in shares), though exposure will vary depending on the team's outlook. For example, during the tough stock market environment of 2008 exposure to equities was reduced to around 70%, while exposure to cash and bonds was increased. The portfolio's historic asset allocation is shown below:

Source: Baillie Gifford as at 30/06/2014

Strong performance has been generated by a combination of stock selection and the fund managers' allocation to global stock markets, according to our analysis, although there are no guarantees this will continue. A higher allocation to shares than the average fund in the sector and a bias towards growth-focused companies increases volatility and means performance tends to be stronger than average when markets are rising, but weaker during tougher times. Over the past 10 years the fund has outperformed the IMA Mixed Investment 40%-85% Shares Sector by over 28%*:

Percentage growth of the Baillie Gifford Managed Fund over 10 years

Past performance is not a guide to the future. Source: Lipper IM *to 02/01/2015

Annual percentage growth
Jan 10 -
Jan 11
Jan 11 -
Jan 12
Jan 12 -
Jan 13
Jan 13 -
Jan 14
Jan 14 -
Jan 15
Baillie Gifford Managed Fund 19.01% -3.64% 11.88% 14.17% 3.48%
IMA Mixed Investment 40-85% Shares 12.71% -5.46% 9.81% 13.86% 4.79%

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Our view on this fund

Overall, long-term performance has been good and we believe the strength and depth of the team will serve investors well. We like their patient approach and willingness to back companies through thick and thin. The team can invest in emerging markets and derivatives which can increase risk. They also have an emphasis on keeping costs low and the fund's ongoing charge for HL clients is just 0.46% a year, while the charge for holding funds on Vantage is competitive at 0.45% a year.

Find out more about this fund including how to invest

Please read the key features/key investor information document in addition to the information above.

The value of investments can go down as well as up, this means you could get back less than you invested. Therefore all investments should be regarded with a long term view. No news or research item is a personal recommendation to deal. If you are unsure about the suitability of an investment please contact us for advice.
Important information - Please remember the value of investments, and any income from them, can fall as well as rise so you could get back less than you invest. This article is provided to help you make your own investment decisions, it is not advice. If you are unsure of the suitability of an investment for your circumstances please seek advice. No news or research item is a personal recommendation to deal.


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