Baillie Gifford US Growth versus JPMorgan American
By Eve Maddock-Jones, Reporter, Trustnet, 12 August 2021
IT North American trusts Baillie Gifford US Growth and JPMorgan American have both benefited from the dominance of US large-cap, technology stocks, yet their difference in popularity among investors is stark.
The 5.3% discount on JPMorgan American contrasts with the Baillie Gifford fund, which is the only IT North America fund running on a premium (2.2%).
Performance has also been unequal. Year-to-date Baillie Gifford US Growth has underperformed out of the two trusts, returning 7.5% versus JPMorgan American’s, 18.3%.
However, comparing the trusts’ performance since the launch of Baillie Gifford US Growth in 2018 it has outperformed considerably.
Although on the surface both trusts appear similar – both having the biggest portfolio exposure to the telecom, media and technology sector – they have very different approaches to this space.
For example, £1bn Baillie Gifford US Growth invests in both public and private companies. The latter makes up 15.5% of the current portfolio but it can be as high as 50%. Jason Hollands, managing director of Tilney Investment Management services, said he expected this allocation to grow.
This tied in with Baillie Gifford’s baseline thinking when launching the trust in 2018 that high growth companies in the US were choosing to stay private for longer now than they had in the past before going public…
For Hollands this ability to invest in private companies is “more interesting” at the moment, making it the more “appealing” to investors than JPMorgan American.
James Carthew, head of investment companies at QuotedData, also picked Baillie Gifford US Growth.
He added that the Baillie Gifford trust tends to be more volatile because it has a bigger emphasis on companies which are loss making or have a shorter trading history.
It also has a concentrated portfolio of just 20-30 ‘exceptional growth’ names, a style across Baillie Gifford funds which also increases its riskiness.
Read more here