By Jean-Baptiste Andrieux, Reporter, Trustnet, 13 July 2023:
Edinburgh-based investment firm Baillie Gifford had a dreadful time in 2022, with none of its 49 funds and trusts making a positive return.
Baillie Gifford’s funds rose to prominence and were popular among investors as their strong tilt towards growth blossomed the low interest rate environment of the post-financial crisis era.
However, things drastically changed last year with central banks hiking interest rates to slow the economy in an attempt to fight inflation.
As a result, many of Baillie Gifford’s trusts experienced peak to trough share price falls of over 60%, including Scottish Mortgage, Edinburgh Worldwide, Baillie Gifford US Growth and Baillie Gifford China Growth.
However, Anthony Leatham, research analyst of investment companies at Peel Hunt, said now is not the time to abandon the growth style, especially as some central banks have indicated that peak interest rates are on the horizon…
One of the trusts Leatham highlighted is the asset manager’s flagship trust, Scottish Mortgage. It has significant exposure (29%) to private equities, with holdings such as SpaceX, which has made investors nervous given the uncertainty in valuations of private firms…
James Carthew, head of investment company research at QuotedData added that we might now be close to the “point of maximum pessimism” towards Scottish Mortgage and that the trust may soon start to recover.
He said: “I don’t expect the recovery to happen as fast as the slide did, but commentators are starting to speculate about IPOs of stocks in the unlisted portfolio, which could help validate the valuation of its unlisted portfolio, calm nerves and rekindle investors’ enthusiasm.”
Carthew also highlighted another Baillie Gifford’s trust in the IT Global sector, Monks Investment Trust.
Read more here