Pacific Horizon Investment Trust: October 2026 Update

• Pacific Horizon invests in public and private companies across Asia with strong growth potential

• Roderick Snell has built a strong track record of investing in Asia

• Long term performance has been impressive, but also volatile

How it fits in a portfolio

The Pacific Horizon Investment Trust aims to deliver long-term capital growth by investing in what the managers believe to be the fastest growing companies in Asia, excluding Japan.

The trust could help diversify a global investment portfolio focused on growth or, due to its growth investment style, it could sit alongside other Asian funds or trusts that use a more value-focused approach.

Investors in closed-ended funds should be aware that the trust can trade at a discount or premium to Net Asset Value (NAV).

Manager

Roderick Snell has been involved with the trust since 2013, serving as deputy manager before being promoted to lead manager in 2021. He joined Baillie Gifford as a graduate in 2006 and spent time with the UK and European equity teams before joining the Emerging Markets team in 2008.

Ben Durrant was appointed deputy manager in January 2023 and has co-managed funds with Snell since 2021. He joined Baillie Gifford in 2017 and has experience across the UK, global smaller and private companies teams. Unlike many fund managers at the firm, Durrant didn’t join as a graduate and previously worked at RBS across a number of divisions.

Snell and Durrant work together on a number of other funds and trusts at Baillie Gifford, all of which invest using a similar process and have some overlap with Pacific Horizon.

Fund managers at Baillie Gifford work as part of close-knit teams, so they receive input and support from a group of experienced individuals. The managers can also draw upon the vast resources at Baillie Gifford to help with additional research, challenge and analysis.

Process

The managers invest in companies with high growth potential that they believe could be capable of delivering exceptional returns over the long run. They think that companies with durable, long-term growth prospects are often underappreciated by investors that take a shorter-term view. Instead, they are prepared to be patient and wait for a company’s full growth potential to be reflected in a rising share price, even if that takes time.

The managers look for underappreciated growth in three forms:

Duration – world-class companies with a competitive advantage and great management. These are typically owned for a long time because their growth is expected to endure.

Pace – rapidly growing companies that most other investors think will grow earnings at a slower pace.

Surprise – companies that may be out of favour or are growing earnings slowly, but where the managers see an ‘inflection point’ for the company to turn things around. They aim to invest in these businesses before other investors recognise the opportunity.

The trust can invest in between 40-120 companies, which allows the managers to have flexibility to invest in more when they find a greater number of opportunities, or less during periods when they want to focus on their best ideas. The trust currently invests in 66 companies, with most invested in China, Korea, and Taiwan. The managers also find opportunities in smaller markets like Vietnam and Kazakhstan.

New investments in the trust over the past year include Chinese semiconductor firms Montage Technology and Cambricon Technologies. Indian travel company MakeMyTrip and Futu Holdings, an online brokerage business, were also added.

The managers sold their investments in two Chinese artificial intelligence (AI) companies – Z.AI and MiniMax. Both were purchased when first listing on the stock market but sold shortly after as the managers felt the shares had become expensive following a sharp rise in price.

The trust can invest in companies of all sizes, including higher-risk smaller companies. It also invests in private companies that are yet to be listed on a stock market. These are often younger companies with exciting growth potential but are more difficult to buy and sell, making them higher-risk. At the end of September 2026, 6% of the trust was invested across five private companies. The trust won’t invest more than 15% in private companies.

The trust also uses gearing (borrowing to invest). This can increase returns but also magnify losses if the market falls or the manager invests in companies that don’t perform well, so is a higher-risk approach. Gearing currently stands at 3%.

Culture

Baillie Gifford is an independent private partnership founded in 1908. It's owned by partners who work full time at the firm – including Roderick Snell. This ownership structure means senior managers have a vested interest in the company, and its funds and trusts, performing well. We think this has helped foster 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, and trusts they manage, 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, and the topics 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.

Cost

The trust's ongoing annual charge in the year to 31 July 2026 was 0.75%. Investors should refer to the latest annual reports and accounts and Key Information Document for details of the risks and charging structure.

The annual charge to hold investment trusts in the HL ISA, SIPP, or Fund & Share Account is 0.35% (capped at £150 p.a. in each account) and 0.25% in the HL Lifetime ISA (capped at £45 p.a.). There are no charges from HL to hold investment trusts within the HL Junior ISA. As investment trusts trade like shares, both a buy and sell instruction will be subject to the HL share dealing charges.

Performance

The trust has performed well for investors since Snell became deputy manager in 2013. Returns of 656.9%* to the end of September 2026 are ahead of the 257.7% growth of the MSCI AC Asia ex Japan benchmark. The trust’s NAV rose 625.0% over the same period. While Snell has been part of the trust’s management team since 2013, he only became the final decision maker in 2021, so not all of this performance can be attributed to him. Past performance isn’t a guide to the future.

While performance has been strong, there have been times when it’s been more volatile, such as in 2022. This was due to the growth style used by the managers being out of favour with other investors.

In the trust’s most recent financial year, to the end of July 2026, share price returns of 63.3% beat the 35.8% growth of the benchmark. The trust’s NAV rose 65.1%.

The trust benefited from having a large amount invested in technology companies, which have performed well. A number of companies chosen by the managers contributed further. These included SK Square, the parent company of leading Korean memory business SK Hynix, and Taiwanese power supply manufacturer Chroma ATE. Chinese gold miner Chifeng Jilong also performed well.

An investment that detracted was autonomous driving company DiDi Global. Indian real estate business Embassy Developments also detracted due to broader weakness in the sector.

The trust currently trades at a discount of 9.4%, which is slightly less than the 12-month average of 9.6%.