Baillie Gifford Managed fund: January 2026 update

• The managers are highly experienced investors and are supported by the vast resource and expertise of Baillie Gifford

• We like their long-term, disciplined investment process, which has helped the managers deliver good long-term performance, albeit with higher volatility than peers

• We think this is a good option for diversified exposure to shares and bond markets across the globe

• This fund features on our Wealth Shortlist of funds chosen by our experts for their long-term performance potential

How it fits in a portfolio

Baillie Gifford Managed invests across six major investment areas: shares in the UK, North America, Europe, Asia, the emerging markets, and bonds. It provides investors with a lot of diversification in one fund.

Shares tend to make up more of the fund compared to peers in the same sector and investors can expect that to continue over the long term. The average amount invested in shares will be around 75%. The fund also has a bias towards investing in companies that have potential for significant growth into the future. We therefore expect the fund to be a more adventurous and volatile option than many of its peers.

The fund could boost the growth potential of a more defensive investment portfolio with a focus on bonds or provide exposure to companies with the potential for long-term growth across the globe.

Manager

Iain McCombie and Steven Hay have managed the fund since November 2012. McCombie specialises in UK equities and joined Baillie Gifford in 1994. Hay joined in 2004 and is a fixed income (bond) specialist.

McCombie and Hay have the support of six other experienced investors who are all experts in their fields. They are representatives of Baillie Gifford’s fixed income, US, Europe, emerging markets and developed Asia equity teams. The managers can also draw upon the firm’s wider team of analysts to help with additional research, challenge and analysis.

While McCombie and Hay have other fund management responsibilities, there’s a lot of overlap in the work involved, meaning they spend most of their time managing investments. The use of other experts within the business to pick shares and bonds for the fund is also beneficial.

Process

The managers like to keep things simple. They tend to invest around 75% of the fund in shares because they think shares will be the main driver of returns over the long run. 65% is the minimum and 85% is the maximum. The rest is invested in government, corporate and higher-risk high-yield bonds, and cash with the aim to dampen volatility and add diversification. The managers can invest in emerging markets and use derivatives, both of which add risk.

The shares portion is managed in line with Baillie Gifford's growth-focused investment philosophy. The managers look for high-quality companies with clear and sustainable advantages over the competition. They consider a variety of factors, such as how fast the industry is growing, how the company's pricing structure works, how easily their products or services could be copied and how loyal customers tend to be. They also consider the firm’s financial stability, the quality of the management team, and whether senior managers' interests are aligned with long-term shareholders.

The team has slightly reduced the amount invested in bonds and increased the amount in shares over the past 12 months. At the end of December 2025, the fund had 78.2% in shares, 19.7% in bonds and the rest in cash.

The managers tend to invest in companies for longer term, which means changes aren’t made too often. That said, they make changes depending on the opportunities available.

Recent additions include US construction company Knife River and UK-listed online classifieds business Baltic Classifieds Group. On the other hand, the team sold their investment in Sprout Social, a social media management business.

Typically around 5-10% of the fund is held in cash. This acts as a cushion when other assets fall and provides a way to invest in opportunities when they arise. The team has put this cash to work in recent years, so it’s notably lower than in the past. At the end of December 2025, 3.1% of the fund was in cash.

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 senior managers have a vested interest in the company, and its funds, performing well.

We think 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 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 all its voting decisions and provides rationale in situations where it votes against management or abstains, in a detailed quarterly voting report. There is also a quarterly engagement report which details the companies engaged with.

Baillie Gifford courted controversy in 2024 when it left the Net Zero Asset Managers’ Initiative, a group of asset managers that have committed to achieving net zero carbon emissions by 2050, and the Climate Action 100+ collaborative engagement scheme. We view this as a disappointing backward step but are encouraged that the group's net zero and engagement-related commitments remain unchanged.

For the avoidance of doubt, this fund is not managed to a specific sustainable or ESG mandate.

Cost

This fund has an ongoing annual charge of 0.43%, but we've secured HL clients an ongoing saving of 0.18%. This means you pay a net ongoing charge of 0.25%. We think this is an attractive price to access a team we hold in high regard.

The fund discount is achieved through a loyalty bonus, which could be subject to tax if held outside of an ISA or SIPP. The HL platform fee, currently up to 0.45% per year, also applies, except in the HL Junior ISA, where no platform fee applies.

From March 2026, the amount clients pay to invest with us will change. Find out more about these changes

Performance

The fund has performed better than the average fund in its sector over the long term. Since McCombie and Hay took over in November 2012, the fund has returned 187.66%* versus the IA Mixed Investment 40-85% sector average return of 135.40%. Past performance is not a guide to the future.

The managers tend to invest more in shares than many other mixed-asset funds, so we expect the fund to perform well compared to peers when stock markets rise, but lag when they fall.

The fund’s performance over the last three years has been more in line with our expectations compared to the start of 2020 to the end of 2022. The period during and immediately after Covid saw significant growth followed by material losses. While the fund has continued to experience more ups and downs than the sector, these have been less extreme more recently.

Over the 12 months to the end of December 2025, the fund returned 8.86% compared to the sector average return of 11.60%. Investments in The Trade Desk, Novo Nordisk and Soitec were some of the worst performers. However, those in Babcock International, Cloudflare and Samsung Electronics were positive.

The managers have a strong long-term record and we continue to think they have the experience and skill to add value for investors over the long term. The potential for short-term volatility though emphasises a long-term time horizon when investing in the fund.