Baillie Gifford American: August 2026 fund update

• This fund invests in disruptive businesses with strong growth prospects in the world’s largest stock market

• The managers benefit from the research carried out by a large bank of analysts

• The fund has typically performed well when its growth style of investing has been in favour.

• This fund does not feature on our Wealth Shortlist of funds chosen by our analysts

How it fits into a portfolio

The Baillie Gifford American fund aims to grow an investment over the long term. The growth style of investing employed aims to benefit from investing in exceptional growth businesses and holding them for long enough to reap the rewards.

We think this fund could work well in a portfolio with little exposure to the US, invested for long-term growth. Its focus on large companies means that it could also sit well alongside a US equity fund focused on medium-sized or higher-risk smaller companies, or a US fund with a value bias.

Manager

The team behind the fund is made up of five talented investors. Tom Slater joined Baillie Gifford in 2000 and has risen up the ranks to become Head of US Equities. Slater is also manager of Scottish Mortgage Investment Trust and has been co-manager of this fund since 2016. Gary Robinson has been with Baillie Gifford since 2003 and has experience of working in their Japanese, UK, and European equity teams prior to joining the US equity team. Robinson has been co-manager of this fund since 2014.

Kirsty Gibson joined Baillie Gifford after graduating in 2012 and has been a co-manager of the fund since the start of 2018. Dave Bujnowski is the fourth co-manager of the fund. After previously working for UBS and Coburn Ventures, he joined Baillie Gifford in December 2018 initially as an analyst. During his time at Coburn Ventures, Bujnowski provided research for investors, including Baillie Gifford. As a result, he was familiar with the culture and investing philosophy at the company ahead of joining.

In June 2020, 17 months after joining Baillie Gifford, he was promoted to co-manager with the ability to make investment decisions on the fund. Bujnowski continues to be based in New York but remains in close and regular contact with the rest of the team, who are based in Edinburgh. The most recent addition to the team is Lillian Li, who was promoted to co-manager in January 2026. Li joined Baillie Gifford in 2022 and before that worked at Eight Roads Ventures and Salesforce Ventures, where she led investments in growth-stage private companies across the US and Europe. The managers also have access to a wider team who spend time researching US companies, so we think that they are well resourced to focus on the job in hand.

Process

The managers invest in companies with high growth potential that they think could be capable of delivering exceptional returns over the long run. They believe that companies with resilient business models make for good long-term investments and that corporate culture can be a key component of company performance and ultimately investor returns, although of course there are no guarantees.

Culture is difficult to measure and capture. But the managers believe that it’s one of the most underappreciated drivers of long-term returns. Companies with a strong culture are often adaptable, durable and willing to invest for the future at the expense of short-term profits. And although there’s no exact science, they believe that it’s these kinds of companies that are often the ones to really deliver on their vision and purpose.

The managers spend a lot of time thinking about industry dynamics and developing trends across the economy, preferring to think of their investments in themes rather than sectors. These themes include 18.4% invested in digital infrastructure, which includes the likes of Nvidia and Broadcom, and 17.5% invested in the digital transformation of commerce, which includes e-commerce platforms such as Shopify and Wayfair.

Founder involvement is another element that the managers view positively. They believe that these individuals, who usually still have much of their wealth tied up in the business, often possess the strong vision that’s required to continue growing the company. The managers believe that few companies are capable of delivering exceptional returns over the long run, so they prefer to run a relatively concentrated fund of between 30 and 50 companies. This means that each one can contribute significantly to returns, although it also increases risk. This concentrated approach combined with the type of companies the managers invest in can lead the fund to rise and fall more than peers. The fund also has a small amount invested in smaller companies, which are higher risk.

During the last year, the managers have made several changes to the portfolio. This includes the addition of aerospace and telecommunication company SpaceX, semiconductor company Broadcom, and financial payment company Mastercard.

In order to fund the additions, the team also sold a number of names including software company Datadog, medical platform company Doximity, and medical device company Penumbra. The team have also trimmed their investments in a number of companies off the back of strong performance, including biotech company Guardant Health and Facebook owner Meta.

Culture

Baillie Gifford is an independent private partnership founded in 1908. It's owned by partners who work full time at the firm. This ownership structure means that senior managers have a vested interest in the company and in its funds performing well.

Three of the fund’s co-managers – Tom Slater, Dave Bujnowski and Gary Robinson – are partners at Baillie Gifford. We think that this has helped cultivate a culture with a long-term focus, where investors' interests are at the centre of decision making. We also like that fund managers are incentivised in a way that aligns their interests with those of long-term investors and should help retain talented managers.

ESG Integration

All of Baillie Gifford’s funds are run with a long-term investment horizon in mind. The firm’s fund managers see themselves as long-term owners of a business, not short-term renters. So, assessing whether society will support, or at the very least, tolerate, the business model over the long term and whether management will act as good stewards of shareholders’ capital is an important part of the investment process.

Dedicated ESG analysts sit with and report into both their respective investment teams and the central ESG function. The firm’s ESG efforts are supported by a dedicated Climate team. Individual investment teams are responsible for voting decisions and engagement for the companies they invest in. Investment in controversial weapons is prohibited across the firm.

The firm reports in a detailed quarterly voting report all its voting decisions and provides rationale in situations where it votes against management or abstains. There is also a quarterly engagement report, which details the companies engaged with and the topic discussed, and further engagement case studies are available on the website. All this information is brought together in the firm’s annual Investment Stewardship Activities report.

Baillie Gifford withdrew from the Net Zero Asset Managers’ Initiative and Climate Action 100+ in 2024, citing concerns that membership had become contested and risked distracting from its core responsibilities. We viewed this as a disappointing backward step, but the firm stated that this decision did not change its approach to analysing climate-related risks or engaging with investee companies.

Although the fund managers integrate ESG into every investment they make, this is not an ESG or sustainable fund.

Cost

The ongoing charge for this fund is 0.52%, but HL clients benefit from a saving of 0.20%, resulting in a net ongoing charge of 0.32%. This saving is provided through a 'loyalty bonus', which is tax-free in an ISA or SIPP. However, this may be subject to tax in a Fund and Share Account.

The HL platform fee of up to 0.35% per annum also applies, except in the HL Junior ISA, where no platform fee applies. Both a buy and sell instruction will be subject to HL dealing charges. Find out more about our charges.

Performance

The fund aims to outperform the S&P 500 index after costs over a five year period. During the five years to the end of July 2026, they have not achieved this. In the last five years, the fund has returned -24.6% compared to a gain of 85.1% of the S&P 500. The share prices of well-known US companies can react very quickly to new information. This can make it difficult to consistently perform better than the broader market over the long term.

Since Slater became head of the team in January 2016, the fund has marginally underperformed the S&P 500 – delivering a return of 359.4% compared to 361.1% of the S&P 500. However, the fund has outperformed the IA North America sector average, which has returned 307.5%. Past performance isn’t a guide to the future, and like all investments, the fund can fall in value, so investors could make a loss.

During the last 12 months to the end of July, the fund has returned -14.1%, behind the S&P 500 which returned 17.2%. The IA North America sector average returned 13.9%.

Our analysis suggests that a number of the fund’s software-related companies detracted significantly from performance. Investors have started to scrutinise these companies’ business models and whether they could be displaced by advancements in AI. This has resulted in a number of software companies' share prices falling significantly. This includes the likes of educational platform Duolingo and gaming platform Roblox. Online streaming company Netflix and online real estate platform CoStar also struggled.

On the other hand, the fund’s investment in semiconductor company Nvidia has continued to perform well as results have impressed investors. Biotechnology company Guardant Health also contributed to performance, as did internet service company Cloudflare.

Although it’s been a tough period, there have been times in recent years where the fund had performed strongly, most notably from 2019 to 2021. Many of the fund’s holdings were beneficiaries of the economic conditions that existed during the pandemic, sending their share prices higher. However, as the US central bank embarked on an interest rate rising programme in 2022 to battle higher inflation, the managers' high-growth investment style fell out of favour. With investors less willing to buy companies with high growth potential, the share prices of some of the fund's investments fell significantly.

You should consider annual performance in the context of a longer time horizon and not in isolation. The manager’s long-term time horizon and the fund’s concentrated nature means that performance can be different to peers and benchmarks. As a result, we don’t expect the fund to hold up as well as the index in a falling market, though it can rise more quickly when markets rise. Our analysis suggests that this is one of the most volatile funds in the sector and investors should consider whether this fund meets their investment objectives and tolerance for risk.