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Keystone Positive Change Investment Trust: November 2021 update

Investment Analyst Dominic Rowles shares our analysis on the manager, process, culture, cost and performance of the Keystone Positive Change Investment Trust.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

This article is more than 6 months old

It was correct at the time of publishing. Our views and any references to tax, investment and pension rules may have changed since then.

  • Baillie Gifford’s Positive Change team took control of this trust in February 2021
  • They invest in companies with the potential to grow significantly and have a positive impact on society or the environment
  • Their approach has so far proven successful with the similarly managed Baillie Gifford Positive Change fund, but this is a different venture

How it fits in a portfolio

Keystone Positive Change Investment Trust aims to deliver long-term growth by investing in companies capable of disrupting entire industries, where sustainability gives them an advantage over competitors. Every investment should have a positive impact on the environment or society, so the trust could work well as part of a broader responsible investment portfolio. Its focus on companies with the potential to grow significantly over the coming years means it could also work well alongside other trusts or funds investing in unloved companies with recovery potential. Investors should be aware that the trust can trade at a discount or premium to Net Asset Value (NAV).


In December 2020, the trust’s Board announced its intention to change the way the trust is run. Instead of focusing on the UK stock market, the trust would adopt a global mandate, with a more sustainable approach. Following a competitive tender process, the Positive Change team at Baillie Gifford was appointed to manage the trust. They took control in February 2021.

This trust is now managed by Kate Fox and Lee Qian. They joined Baillie Gifford in 2002 and 2012 respectively and have spent their entire careers at the firm, gaining experience across a range of investment teams.

Michelle O’Keeffe and Edward Whitten are Senior Impact Analysts and support the managers. O’Keeffe joined the firm in 2015 and has a wealth of experience assessing and understanding environmental risks and opportunities. Whitten joined Baillie Gifford in 2018. He previously spent three years at a consultancy firm advising investors, insurers and companies on risk management and social impact in emerging and frontier markets.

Fox, Qian, O’Keeffe and Whitten have run the similarly managed Baillie Gifford Positive Change fund since launch in January 2017.

The team has the input of three other analysts who are dedicated to the Positive Change strategy, and four portfolio advisers who each specialise in different areas and bring a range of expertise to the trust. Overall, we think the trust is well-resourced.


The trust invests in companies that help to solve social or environmental problems and have the potential to disrupt their entire industry. In the first stage of their analysis, the managers consider whether the company’s product or service is sufficiently different to, and better than, the status quo. They also think about the quality of the management team, how the company treats its stakeholders, and if it has barriers to entry from competitors. Then, they consider the company’s valuation – each investment should have the potential to double over five years.

The second stage of their analysis focuses on impact potential. The managers think about the company’s intent, including how committed it is to driving the positive outcome, the impact its products and services have on the environment and society and the way it conducts its business.

Each investment in the trust sits within one of four impact themes:

The managers tend to invest in relatively few companies. This means each one has the potential to make a big difference to the performance of the portfolio, either positive or negative. The trust’s concentration adds risk, as does its exposure to emerging markets and smaller companies. The trust also borrows money to invest with the aim to increase returns (sometimes known as gearing), but this could magnify losses in a falling market and increases risk.

The managers also invest in unquoted companies (those not listed on the stock market). Investors should be aware that investing in unquoted companies increases risk and they can be considerably less liquid than those traded on established stock exchanges. Around 2% of the trust currently invests in unquoted companies, although the managers expect this to increase over time.


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 and trusts, performing well. Co-manager Kate Fox is a partner at Baillie Gifford.

We think the firm’s partnership structure has helped cultivate a culture with a long-term focus, where investors' interests are at the centre of decision making. We also like that portfolio managers are incentivised in a way that aligns their interests with those of long-term investors.

Baillie Gifford recognises the risks posed by Environmental, Social and Governance (ESG) issues and uses its position to encourage companies to act in a sustainable way. The company has a dedicated Governance and Sustainability Team of over twenty people, which is responsible for producing ESG research which challenges and contributes to the investment decision-making process. They also monitor companies' progress on an ongoing basis and engage with them on ESG matters where appropriate.


The trust’s ongoing annual charge is 0.83%. Investors should refer to the latest annual reports and accounts and Key Information Document for details of the risks and charging structure.

If held in a SIPP or ISA the HL platform charge of 0.45% (capped at £200 for a SIPP and £45 for an ISA) per annum also applies. The platform charge doesn’t apply if the trust is held in a Fund and Share Account.


The managers have been implementing the Positive Change strategy since the launch of the open-ended Baillie Gifford Positive Change fund in January 2017, and it’s performed well over that time. Our analysis puts this down to the managers’ ability to select outstanding companies, regardless of their size or what sector or country they’re in. Performance was also boosted by the managers’ focus on companies with plenty of growth potential, an investment style that’s largely been in favour throughout the period. However, there will be times when this style isn’t in favour and the fund’s performance could be weaker. As always, past performance is not a guide to the future.

While the managers’ track record on the Baillie Gifford Positive Change fund is impressive so far, it’s still relatively short. This means there is less data for us to analyse to help us understand how the fund, and the Keystone Positive Change Investment Trust, might perform over the longer term and in different stock market environments.

Since the team began managing the Keystone Positive Change trust in February 2021, it’s risen 11.05%*, broadly in line with its peers in the AIC Global sector, although this is a short time period over which to judge performance.

Investors should note that the trust’s focus on companies making a positive difference means it's more specialist than many others in the AIC Global sector. There are large areas of the market that the trust won’t invest in, so there will be times when the trust’s performance differs significantly from its peers and the broader global stock market. We think an investment in this trust should only form a small part of a well-diversified portfolio.

Annual percentage growth

31/10/2016 To 31/10/2017 31/10/2017 To 31/10/2018 31/10/2018 To 31/10/2019 31/10/2019 To 31/10/2020 31/10/2020 To 31/10/2021
Keystone Positive Change Investment Trust** 10.48 -8.95 7.27 -20.19 42.84
AIC Investment Trust Global 22.83 3.80 8.16 3.59 28.36
Baillie Gifford Positive Change N/A*** 14.47 9.40 71.14 38.00
IA Global 14.02 1.11 11.18 7.28 28.47

Past performance isn't a guide to the future. Source: *Lipper IM to 31/10/2021.

** The Positive Change team took control of the trust in February 2021. Prior to this, it was managed with a UK-focused mandate.

***The Baillie Gifford Positive Change fund launched in January 2017. Data prior to this point is unavailable.



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Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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