Baillie Gifford, SpaceX rocket launch via Bill Jelen on Unsplash

2020: The Year Of Baillie Gifford

The various investment trusts and funds run by Baillie Gifford are dominating the performance charts this year. It’s no flash in the pan, though, as their long-term record is arguably even more impressive.

Of the 11 investment trusts run by Baillie Gifford, 10 are in profit for 2020. The laggard is UK Growth, which is down by 9%, meaning it’s still well ahead of its benchmark.

It’s a similar story with its open-ended funds. Of the 23 equity funds Baillie Gifford runs, 20 are in the black.

At the time of writing, world markets measured in sterling, are roughly flat for this year.

A bumper 10 years

Going back a decade shows a similar story, with 12 of 15 open-ended equity funds at least trebling your money, which is roughly what a global tracker would have done.

And 7 out of 9 investment trusts have at least trebled. The two trusts that didn’t were only taken over by Baillie Gifford in the last couple of years.

The two best performers, one investment trust and one open-ended are up some 750%.

And a solid century

Baillie Gifford has been around for over 100 years and set up Scottish Mortgage, its first investment vehicle, in 1909.

Monks, another of its best-known trusts, was set up in 1929 and has been managed by Baillie Gifford since the early 1930s.

Baillie Gifford is a private partnership, based in Edinburgh, with a few dozen partners and over a thousand staff.

Its assets under management have been compounding furiously in recent years. A recent FT article showed that although they dipped below £50bn at the height of the financial crisis, they had reached nearly £200bn at the end of 2019 and £262bn by June 2020.

They are still small fry in the wider world of asset management, where the top 20 look after assets of $1 trillion-plus and the largest (Vanguard and BlackRock) run several trillion.

The performance puzzle

“Past performance is no guarantee of future results” is a phrase that every investor is very familiar with.

However, the fact that so many Baillie Gifford funds are not only beating their benchmarks but are ranked at or very the near the top of their respective sector performance tables suggests they are definitely on to something.

For example, according to their June 2020 factsheets, Baillie Gifford’s American fund is ranked 1st out of 124 over five years while its Chinese fund is 2nd out of 34.

In the global sector, over the last three years, Baillie Gifford takes the 35th, 25th, 5th, 3rd, 2nd and 1st slots out of nearly 300 funds!

As a firm, Baillie Gifford puts a strong emphasis on long-term growth prospects. Many of its investments are technology-related although Baillie Gifford seems to prefer the term ‘disruptive’.

The re-emergence of China as an economic superpower is another core theme across many of its funds.

Lastly, Baillie Gifford is increasingly investing in private companies believing that many of the best opportunities are becoming listed at a much later stage in their development than they used to.

Best-performing trusts

Here are Baillie Gifford’s six best-performing investment trusts of 2020:

US GrowthEuropean
USEuropeAsia Pacific
ManagersJames Anderson,
Tom Slater
Spencer Adair,
Malcolm MacColl
Douglas Brodie,
Svetlana Viteva
Luke Ward
Gary Robinson,
Helen Xiong
Stephen Paice,
Moritz Sitte
Ewan Markson-Brown,
Roderick Snell
Net assets£11.9bn£2.3bn£0.8bn£0.5bn£0.4bn£0.3bn
up to 30%
no stated
up to 15%
up to 50%
up to 10%
up to 10%
YTD return55%18%39%56%30%60%
3-year return115%59%109%32%85%
10-year return760%307%468%187%279%

Note: The return figures are as of 17 August and the net assets are as of 30 June.

Many of these trusts have been managed by Baillie Gifford since they were launched or shortly afterwards. Edinburgh Worldwide has been a Baillie Gifford trust since 2003 and Pacific Horizon since 1992.

The exception among the best-performers is Baillie Gifford European Growth. It was known as The European Investment Trust until late 2019 and had been run by Edinburgh Partners since 2010.

Follow the change to Baillie Gifford, only one holding, Ryanair, was kept in the portfolio while 40 new investments were bought.

In the five years ended September 2019, the trust’s total share price return was around 25%. Since Baillie Gifford took over in December 2019, it’s up 34%!

Despite Scottish Mortgage and US Growth attracting most of the headlines, Pacific Horizon is the best performer in 2020, albeit by a narrow margin.

As you might expect from its name, Pacific Horizon is heavily weighted towards China with 40% in Hong Kong/Chinese listed companies, 20% in Korea, and roughly 10% in both Singapore and Taiwan.

Despite Pacific Horizon’s stellar 2020, it still trails behind Baillie Gifford’s two Japanese investment trusts over the last 10 years, namely Baillie Gifford Japan and the small-cap focused Baillie Gifford Shin Nippon.

I’ve included a line for the percentage in unlisted assets but this is only really of note for Scottish Mortgage and US Growth right now.

Both these trusts have the authority to invest a lot more in unlisted companies, so this is likely to become more of a feature in future.

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I’ve also noted the stated range for the number of positions. Scottish Mortgage and US Growth seem to be the most concentrated trusts, with the largest percentages in their top 10 investments. They both have a lot of unlisted holdings, but most of them are quite small right now.

Monks is by far the most diversified of these six trusts, followed by Edinburgh Worldwide.

Best-performing open-ended funds

Here’s a similar table for the best-performing open-ended funds so far in 2020:

AmericanLong Term
Global Growth
ManagersTom Slater,
Gary Robinson,
Kirsty Gibson,
Dave Bujnowski
Mark Urquhart,
Tom Slater
Julia Angeles,
Kate Fox,
Kirsty Gibson,
Lee Qian,
Will Sutcliffe
Iain McCombie,
Gary Robinson,
Mike Gush,
Matt Brett,
Josie Bentley,
Zaki Sabir
Douglas Brodie,
Svetlana Viteva
Luke Ward
Mike Gush,
Sophie Earnshaw,
Roderick Snell
Net assets£4.1bn£4.2bn£0.7bn£0.4bn£1.2bn£0.2bn
YTD return72%56%47%42%40%28%
3-year return162%125%119%81%100%49%
10-year return751%228%

The open-ended funds seem to have more named managers than the investment trusts. I’ve listed the deputies as well but often no distinction seems to be made on the factsheets.

What is clear is that Baillie Gifford has a lot of “bench strength” across its retail offerings. James Anderson and Tom Slater are the best-known names right now, but we may hear more and more from the other names in future.

The open-ended funds are a little younger than the investment trusts. However, their 2020 and 3-year returns actually look a bit better, which I found a little surprising. They do seem to have slightly more concentrated portfolios which might be one reason for this.

Scottish Mortgage (the trust) and Long Term Global Growth (the fund) seem very closely related in terms of holdings, position sizes, and managers, although Scottish Mortgage has the additional kicker of unlisted investments.

US Growth and American make another pair, as does Edinburgh Worldwide and Global Discovery.

Again, in both cases, the main difference seems to be the presence of unlisted companies in the investment trust.

Positive Change and Global Stewardship don’t seem to have direct investment trust equivalents right now.

Positive Change looks for 25-50 global high-quality growth companies that specialise in:

  • social inclusion and education;
  • environment and resource needs;
  • healthcare and quality of life; or
  • base of the pyramid (addressing the needs of the world’s poorest populations).

Global Stewardship takes more of an exclusion approach, avoiding businesses that derive more than 10% of their annual revenues from:

  • alcohol;
  • fossil fuel extraction;
  • gambling;
  • tobacco;
  • adult entertainment; and
  • armaments.

Both these funds are fairly small right now but seem to be attracting plenty of cash inflows due to their strong performance since they launched a few years ago.

Go East

In sterling terms, the Chinese market is up around 18% this year, so it’s not surprising to see the Baillie Gifford China fund is also doing well.

And we heard recently that the management of the £230m Witan Pacific investment trust is going to be taken over by Baillie Gifford with its focus narrowed to China:

It is proposed that, subject to shareholder approval, the Company’s investment objective is changed to produce long term capital growth by investing predominantly in shares of, or depositary receipts representing the shares of, Chinese companies.

Under Baillie Gifford’s management, the portfolio will consist of a diversified portfolio of 40 to 80 securities and up to 20 per cent. of the total assets of the Company may be invested in unlisted securities.

As at 30 June 2020, Baillie Gifford had over £44.6 billion invested in both Chinese listed and unlisted companies via its global, regional and unlisted strategies.

Sophie Earnshaw and Roderick Snell will manage the portfolio on a day-to-day basis.

Sophie Earnshaw is an investment manager in Baillie Gifford’s emerging markets equity team and has been co-manager of the Baillie Gifford China Fund since 2014 and is also a decision-maker on the China A Share Fund.

Roderick Snell is also an investment manager in Baillie Gifford’s emerging markets equity team and has managed the Baillie Gifford Pacific Fund since 2010 and been deputy manager of Pacific Horizon Investment Trust since September 2013.

So we can see that around 17% of Baillie Gifford’s total assets under management are now in Chinese investments.

In terms of equity holdings, the percentage may be even higher as the latest total of £262bn includes a number of fixed-income and multi-asset funds.

The combination of ‘China’ and ‘unlisted’ might make many investors run a mile but I think it will be interesting to see the direction this trust takes and how its holdings compare to the other Baillie Gifford trusts and funds that invest in this region.

Explicit targets

Another noticeable difference between the investment trusts and open-ended funds is that the latter all seem to have explicit performance targets.

All six of the funds I’ve looked at here aim to outperform their benchmark by between 1.5% and 2.5% per annum over five-year rolling periods.

The American fund, this year’s top performer, has the lowest target of 1.5%+. Long Term Global Growth is the punchiest at 2.5%+. The rest are all 2%+.

Over the five years to April 2020, the American fund returned an annualised 25.4%, which compared
to the S&P return of 13.5% and the target return of 15.0%. That means it’s comfortably ahead right now but sustaining outperformance like this is never easy.

For example, out of 4,000 open-ended funds and investment trusts, only 20 have managed to average 20% a year or more over the last decade. The very best have done 24% a year.

What these trusts and funds hold

So what underlying investments have been driving these returns in 2020? Here are the top 10 holdings as of June 2020 in a weirdly formatted table:

Top trust holdings as of June 2020

US GrowthEuropean
Tesla Inc 4.1MarketAxess 5.1Shopify 8.8Prosus N.V. 6.0SEA Limited 9.9 9.4Naspers 3.2Ocado 4.9Tesla Inc 8.4Spotify 4.7
Tencent 6.1Alphabet 2.5Alnylam Pharma 8.0Zalando 4.9Alibaba 4.6
Illumina 6.0Moody’s 2.3Tesla Inc 4.4Wayfair 4.9IMCD 4.4Kingdee Int Soft 3.6
Alibaba 5.2Microsoft 2.2Chegg 3.5Netflix 3.9Bechtle 4.3Samsung SDI 3.4
ASML 3.7Alibaba 2.1Teladoc 3.0Trade Desk 3.8NIBE 4.0Li Ning 2.9
Meituan Dianping 3.2Schiehallion 2.0Zillow 3.0MarketAxess 3.1adidas 3.9Accton Tech 2.8
Delivery Hero 3.0Mastercard 1.9LendingTree 2.7Alphabet 2.9Atlas Copco 3.8L&C BIO 2.2
Spotify 2.7Shopify 1.9Staar Surgical 2.0Illumina 2.8L’Oreal 3.3Zai Lab 2.2
Netflix 2.7Prudential 1.9Zai Lab 1.9Mastercard 2.5ASML 3.3Tencent 2.1
Total – 54.6Total – 24.1Total – 34.9Total – 48.9Total – 42.9Total – 38.2

Top fund holdings as of June 2020

AmericanLong Term
Global Growth
Shopify 10.0Tesla Inc 9.0Tesla Inc 9.5Shopify 5.6Alnylam Pharma 4.7Tencent 9.7
Tesla Inc 8.1Dexcom 5.2Ocado 4.5Alibaba 9.4 7.9Tencent 6.5M3 5.6Tesla Inc 4.6MarketAxess 4.1Ping An
Insurance 5.8
Wayfair 6.0Illumina 5.7ASML 5.5MarketAxess 4.5Tesla Inc 4.7
Netflix 4.9Alibaba 5.2Illumina 5.5SoftBank 3.8Chegg 4.0Meituan Dianping 4.3
The Trade Desk 4.6Meituan Dianping 4.2TSMC 4.5Chegg 3.2Teladoc 3.7Kweichow Moutai 3.5
MarketAxess 4.1Pinduoduo 3.9MercadoLibre 4.2Netflix 3.0Zillow 3.0China Merchants
Bank 2.7
Alphabet 3.4Facebook 3.9Umicore 4.0Tencent 2.2Staar Surgical 3.0NetEase 2.4
Illumina 3.4Netflix 3.6NIBE 3.8Wayfair 2.1LendingTree 2.3Guangzhou
Kingmed 2.1
Mastercard 3.0Kering 3.4Kingspan Group 3.7Workday 2.1Genmab 2.3Zai Lab 2.1
Total – 55.1Total – 53.4Total – 52.9Total – 36.3Total – 35.7Total – 46.6

Lots of names turn up multiple times. There are plenty of well-known US and Chinese firms but a lot many investors won’t be that familiar with as well.

Tesla and Amazon are Baillie Gifford’s best-known holdings but they are certainly not the sole drivers of this year’s returns.

For example, looking at the American fund’s top 5, Netflix is the worst performer, up a mere 45% in 2020. Amazon has risen 70% but leaving Bezos in the dust are Shopify (+150%), Wayfair (+200%), and Tesla (+250%).

In too deep?

Among these dozen funds, here are the most widely-held positions among their top ten lists:

CompanyIn top

Tesla appears the most times with 8 out of 12 appearances. I’m pretty sure it’s only just outside Monks’ top 10 and it’s US-listing means it’s not eligible for the other 3 trusts and funds.

Baillie Gifford’s 6.3% total stake in Tesla makes it the electric car maker’s second-largest shareholder after Elon Musk’s 18% and narrowly ahead of both Vanguard and BlackRock, who are roughly 15-20 times larger than Baillie Gifford.

But Baillie Gifford also has significant stakes in Illumina (gene sequencing), MarketAxess (trading platforms for credit markets), and Shopify (e-commerce platforms).

Illumina looks the ‘riskiest’ major holding on this measure although I believe Baillie Gifford has held a similar size stake since 2011.

And Baillie Gifford’s holding in Tesla has actually declined over the last few years as I think it was around 9% in 2016.

Summing up

Some people might argue Baillie Gifford has got lucky in 2020 but these gains have been in the making for a long time.

Many of its positions have been held for several years and Baillie Gifford is now reaping the reward for sticking to its long-held convictions.

Listening to their managers in various podcasts and interviews (mostly Anderson and Slater) is always instructive.

You come away with the impression they don’t get carried away with their performance and they’re relentlessly focused on the long term.

After such a strong performance, we could see a pause for breath. But if 2020 has taught us anything, it’s that the stock market never loses the power to surprise us!



Please note that I may own some of the investments mentioned above -- you can see my current holdings on my portfolio page.

Nothing on this website should be regarded as a buy or sell recommendation as I'm just a random person writing a blog in his spare time and I am not authorised to give financial advice. Always do your own research and seek financial advice if necessary!

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14 Replies to “2020: The Year Of Baillie Gifford”

  1. Nice write-up as ever IT and thanks for including the open-ended funds in your article.

    I have been pleased with the performance of the Positive Change fund over the past couple of years. Annualised return of 30% p.a. since launch puts it near the top of the global equities leaderboard.

    I have also added some of the holdings as stand-alone shares in my green portfolio over the past year – such as Tesla and NIBE. I think BG recognise the impact of climate related issues and are able to identify companies that are likely to benefit at an early stage which gives them a clear edge over passives.

  2. Thanks. Purely from a branding point of view, Positive Change seems a lot more appealing than the somewhat vague Global Stewardship. Its returns seem to be a lot better the last few years, too, but the more concentrated portfolio could be a factor in that.

  3. Great article as usual! But I hate buying at all time high so I will avoid these for now… also Tesla is a huge bubble IMHO.

    What do you think about Lindsell Train Investment Trust? Trading at 6.50% discount compared to avg of 15.78%. Also TRY Proprty Investment Trust trading at -11.44% discount, looks like quite a bargain (I bought few weeks ago).

  4. I know how you feel M, although I’m wary of such a strong run rather than just an all-time high, per se.

    There was a useful piece by Michael Batnick recently looking at how shares do following all-time highs. They happen more often than you might think, given that markets tend to rise over the long term.

    I’m seeing LTI at a premium of 2% as of this morning, according to Morningstar. But that’s just splitting hairs, of course, as it’s rarely been on such a small premium over the last decade.

    I still like it although I think it would be an uncomfortable position for me to hold over the long term, given that the premium does tend to be so volatile. There was a great interview with Nick Train via Edison recently which gives a lttle more colour on the prospects for the overall Lindsell Train business, which is so crucial to LTI’s longer-term prospects.

    Being a little lazy, I’m probably going to stick with the LT Global fund for now, rather than spice things up with LTI on top. But that’s just me.

    Still like TRY as well and it’s amazing to see that it went from around £5 to 217.5p at the height of the crisis in March. There are more personal factors at play for me here, as I have a fair amount of directly held property so I don’t feel the need to add to that within my share portfolio as well.

  5. Thanks for the brilliant write up. Ive always avoided SMT as I figured I had exposure via some of my passives. Monks I was incredibly fortunate this year as I had a significant SIPP contribution to invest and luck than judgement has resulted in an eye watering return. Monks allows me exposure to their PE Schiehallion Fund which you did a wonderful write up of.

  6. After numerous attempts I still cannot sign up for your newsletter. I never receive the email to click onto. Can you help?

  7. Many thanks IT.
    I sold my holdings in ATST awhile back, having gone through their portfolio and discovered investments in tobacco companies, which is a no-no for me.
    I reinvested in SMT and and since then my biggest regret is taking profits! So difficult just to leave things alone…I was also in MNKS. Decided too much overlap with my other BG holdings so put that into MWY. Returns there are a little more pedestrian but it brings diversification and with its somewhat more conservative emphasis, I can sleep at night.
    I have tried to have more emphasis on ESG considerations recently and am also v happy with BG’s Global Stewardship fund.
    I have also have some more holdings in Royal London Sustainable World and Trojan Ethical (like PNL, but a fund, rather than IT) which I am also happy with and they have little overlap with the BG holdings so seem a good complement. I am keeping an eye on Kames Global Sustainable too, but not invested yet.

    Do please keep posting!

  8. P.s. Obviously BG epitomises “growth” investing (as opposed to the “value” style).

    This has prospered in our recent world of low inflation and low interest rates, which are necessary sustain the stratospheric valuations of early stage companies such as Tesla.

    I would be interested to know your views on how “growth” investing will stand up if we get inflation in the near term of the sort predicted by Russell Napier et al. See his recent piece here:

    If inflation rates go up and the discount rate applied to future profits also therefore increases, then it may well be that the markets will not be so kind to BG-style investing.

    Where would you put your money then?

    I would love to know your views on whether you feel we are looking at inflation over 4% in the next few years, and if so how BG’s house style would prosper.

  9. From Citywire:

    “Separately, Stifel analyst Iain Scouller said there was a ‘good case’ for investors to take some profits on the trust, which has surged 94% from March lows.

    Scouller pointed to the concentrated portfolio as a risk, with the trust’s 10 largest investments accounting for 58% of net assets at the end of June.

    SMT had a 13.4% position in Tesla (TSLA.O) and 9.7% in Amazon (AMZN.O), its top pair of holdings, at the end of July, according to the latest factsheet. Chinese tech giants Tencent (0700.HK) and Alibaba (BABA.N) were 5.9% and 5.4% positions.

    Scouller pointed out those bets had worked ‘exceptionally well in recent months’ as technology disruptors had thrived during the pandemic and Chinese companies, making up about a fifth of investment, had performed strongly after the country’s comparatively strong recovery from the virus.

    ‘In recent months, this concentration has worked well for shareholders given the very strong price performance of many of the trust’s largest investments. However, in a different market scenario, or if there were some negative company specific issues, the concentration could be an important risk factor, potentially impacting performance,’ said Scouller.

    While the catalyst for this shift was unclear, it could include a rotation away from ‘growth’ stocks to out-of-favour ‘value’ stocks, a shift in US policy on technology companies if there is a change in administration after November’s presidential election or market sentiment weakening on technology and growth stocks.”

  10. Thanks J. A lot of people seem to find SMT a little too spicy and opt for Monks as a more digestible alternative.

    I haven’t check Schiehallion for a while but I see from the June 2020 it’s 56% invested, which from memory ties in with the pace of investment they outlined when they first listed. Still at a 20%+ premium as well!

  11. Hey Tom, I suspect I might have done the same with SMT, had I had the foresight to actually buy it! Mixing it with MNKS and MWY sounds like a decent balance though.

    I’m fairly relaxed about inflation although admittedly I don’t spend very much time thinking about big macro issues like this and I don’t think I can offer any great insight on them.

    I generally don’t adjust my portfolio based on macro forecasts as so few people get it right on a consistent basis and there are so many other factors at play. I’m a little cautious right now because valuations seem pretty high and they’ve had such a good run, not because I’m expecting inflation to be higher.

    Obviously, if inflation does hit 4% and stay there for an extended period then that definitely could have a knock-on effect on valuations. Whether that will happen quickly or be more gradual is anyone’s guess. I suppose that as many of these companies are US-based, it’s likely to be the US inflation rate/interest rate that is more important here than the UK and Europe.

    I’d probably be happier to invest in BG funds and trusts if any adjustment like this happened, as the underlying valuations might look more reasonable.

    Not sure if that’s helpful 🙂

  12. Thanks v much, IT. Yes. Helpful… I agree. There is no point trying to be too clever getting in and out.

    In the end one has to be happy with holding stocks for the long term and I can say that about any of the above.

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