A sharper edge for BGUK
Baillie Gifford UK Growth Trust (BGUK) offers a different way to invest in the UK through a concentrated portfolio of high-quality growth companies. Performance has been held back by a long period in which UK growth investing has been out of favour. Even so, many holdings have continued to make operational progress, while valuations remain low compared with their earnings prospects and international peers.
The appointment of James Smith as a third co-manager adds a fresh perspective and should tighten portfolio construction, valuation and sell discipline, while keeping BGUK’s long-term growth approach. With gearing in place, a stronger management team and a portfolio with significant long-term growth potential, BGUK could benefit from any recovery in UK growth shares. The management fee has been cut by 20% until April 2029, and the high-single-digit discount to NAV could add upside if performance and investor sentiment improve.
Focused portfolio of UK growth equities
BGUK aims to achieve capital growth by investing in a concentrated portfolio (35–65 companies) of predominantly UK equities, with the aim of providing a total return in excess of the FTSE All-Share Index.
At a glance
Share price and discount
On 28 January 2025, BGUK announced an updated buyback policy whereby share repurchases would be used with the aim of maintaining a single digit share price discount to the trust’s net asset value (NAV) per share, in normal market conditions. Since then, the discount has been quite stable.
Performance over five years
The biggest impact on growth stocks, and therefore BGUK’s relative NAV and share price performance, came from rising inflation and expectations of higher interest rates in late 2021 and the first half of 2022.
The gap then stabilised as inflation fell and interest rates eased, but it has widened again as inflation and rate expectations rose, first after Trump’s Liberation Day tariffs and more recently due to the war in Iran.
| 12 months ended | Share price total return (%) | NAV total return (%) | MSCI UK total return (%) | MSCI UK Growth total return (%) | MSCI World total return (%) |
|---|---|---|---|---|---|
| 31/07/2022 | (24.4) | (20.4) | 12.8 | 5.1 | 4.2 |
| 31/07/2023 | (0.7) | 4.4 | 6.8 | 5.6 | 8.0 |
| 31/07/2024 | 7.5 | 8.1 | 13.5 | 7.7 | 19.1 |
| 31/07/2025 | 18.5 | 13.2 | 12.7 | 8.8 | 12.8 |
| 31/07/2026 | 8.2 | 6.2 | 23.6 | 6.6 | 18.7 |
Fund profile
Focused UK growth equities portfolio
Further information can be found at Baillie Gifford’s website: www.bailliegifford.com
BGUK aims to deliver capital growth and outperform the FTSE All-Share Index by investing mainly in UK shares. It runs a relatively concentrated portfolio of 35 to 65 companies, mostly from the FTSE 350, but it can also invest outside the index.
Baillie Gifford has managed BGUK since the end of June 2018. The managers use a conviction-led stock-picking approach, with position sizes based on their confidence in each company rather than its index weight. BGUK may use convertible securities and equity-related derivatives for efficient portfolio management. It can also invest up to 10% of total assets in unlisted companies, measured at the time of investment.
BGUK’s benchmark is the FTSE All-Share Index, but it is managed without reference to any index. In this report, we use the MSCI UK Index as a proxy and compare performance with the MSCI UK Growth and MSCI World indices.
About the managers
Well-resourced investment team.
Baillie Gifford has 175 investors and analysts across 23 teams, mainly based in Edinburgh. Its partnership structure supports a collegiate investment culture, while portfolio managers keep final responsibility for their portfolios. At 30 June 2026, the firm managed or advised on around £197.4bn of assets, including £6.8bn in UK equities. BGUK is co-managed by Iain McCombie, Milena Mileva and James Smith (see page 18 for brief biographies).
Managers’ view
Sentiment towards growth stocks and the UK market continues to improve
Interest rate cuts are still coming through.
When we last published on BGUK in August 2025, we noted improving sentiment towards growth stocks, which was reflected in BGUK’s interim results for the six months to 31 October 2025. Since then, value stocks have rallied. As discussed in the performance section from page 11 onwards, this has been driven by higher inflation and interest rate expectations, as energy costs rose following the outbreak of war in Iran. A range of software and platform businesses were also hit by the “SaaSpocalypse” earlier this year (when companies – especially Software-as-a-Service companies – perceived as threatened by advances in agentic AI sold off dramatically), creating an additional headwind.
Investors are increasingly looking beyond the US for opportunities, and that is benefitting the UK.
On the positive side, global capital has continued to shift towards other developed markets, including Europe and the UK, due to greater uncertainty around US government policy. However, while growth stocks are now delivering stronger earnings growth, this has not been reflected in share prices. UK equities, particularly UK growth stocks, still trade at a large discount versus both historic levels and global peers. The managers believe this gap between earnings growth and share prices will not last indefinitely, and have kept gearing in place to benefit if valuations recover.
They believe buying high-quality growth companies when they are out of favour offers better long-term returns than chasing areas that have recently benefited from unusually strong cyclical conditions. They have therefore used share price falls as a chance to add to some holdings.
AI selloff too indiscriminate
BGUK’s managers think the market reaction to AI has been too broad-brush. Holdings such as Autotrader, Rightmove, Experian and Softcat were derated as investors worried AI could weaken their roles in their industries. The managers accept these businesses will need to adapt, but argue AI does not automatically replace proprietary data, trusted brands, network effects, customer relationships and embedded workflows that support their competitive positions. In some cases, AI could make these strengths more valuable and easier to monetise. These companies are already launching AI-enabled products, and the managers see the share price weakness as an opportunity, not a sign that the investment cases are broken.
Fundamental philosophy remains intact
The managers accept that stock selection has not been good enough. A board review found the trust has usually picked companies able to deliver strong earnings growth, but has sometimes paid too much or been too slow to sell when valuations became stretched. With James Smith joining as a third co-manager, there will be more focus on portfolio construction, valuation and sell discipline, and turnover is expected to rise from historically very low levels. However, BGUK’s long-term growth philosophy remains unchanged.
Investment approach
Markets are inefficient at pricing long-term growth
Baillie Gifford believes markets often undervalue long-term growth, particularly over five years or more, creating chances to outperform. Its investment approach therefore focuses on long-term thinking and holding on to successful companies with strong management and durable business models.
Three-stage team-based approach
Baillie Gifford favours a team-based approach, believing teams make better decisions than individuals. This is backed by a strong culture of debate and constructive challenge. The firm is organised into a small number of investment teams running different growth strategies. Its UK equities team follows a three-stage process: discovery, debate and decision.
Stage 1 – Discovery: This is the idea-generation stage. Every six weeks, the team holds a prospects meeting to set research priorities for the next six weeks. From a UK universe of more than 500 stocks, it keeps a priority list of around 200 companies. Portfolio managers and analysts are expected to do their own research, supporting accountability for investment decisions. Members bring early-stage ideas to the prospects meeting for open discussion. These talks decide which ideas deserve deeper research.
A stock will only be researched in depth if it has a credible long-term growth case.
A stock is only researched in depth if it has a credible long-term growth case, although the team also reviews other businesses to understand competitors and industry trends. Analysts can use external research and Baillie Gifford colleagues, but are encouraged to pursue areas they find interesting. They work as generalists rather than sector specialists, and there is no regular “maintenance research” from a fixed list of stocks.
‘Debate’ is the most important stage.
Stage 2 – Debate: Debate is the most important stage. It is based on a short investment note, limited to three pages for the UK equities team, to keep the work focused and end with a clear recommendation. Extra detail can sit in appendices. Each note follows Baillie Gifford’s five-question framework:
- Edge – why is a stock interesting? Industry background, company factors, competitive position, and key issues for the investment case.
- Growth – what will it look like in five years? Sales, profit margins and capital allocation.
- Sustainability – what, if any, ESG factors are material to the investment case? Consider both opportunities and risks. Climate impact, sustainable business practices, board structures, and management alignment.
- Valuation – should we own it? Valuation, why a company should trade well, and likely valuation in five years and beyond.
- Discipline – what would make us sell? Key risks and non-negotiables.
Another team member is appointed as a devil’s advocate to challenge assumptions and help strengthen the final recommendation.
Stage 3 – Decision: The team discusses every stock, but the lead managers make the final portfolio decisions, combining team debate with clear individual accountability.
Sell discipline: The managers will sell if they lose confidence in management, think the business model is failing, or believe that the market has fully recognised the company’s growth potential.
Asset allocation
Portfolio is radically different to the benchmark.
As at 30 June 2026, BGUK held 36 companies, unchanged in number from 30 June 2025 (the most recently available information when we last published). The industry breakdown in Figure 1 shows a diverse set of holdings. Despite its UK all-cap remit, BGUK has no exposure to large parts of the market, which reflects its concentrated growth approach and its decision not to build the portfolio with reference to the benchmark.
Figure 1: Industry allocation as at 30 June 2026
Although BGUK is a long-term, low-turnover portfolio, its sector exposure shifts gradually. Since our last report, the biggest increases were industrial engineering (+2.1 percentage points), investment banking and brokerage services (+1.7 points) and media (+1.3 points). The largest falls were industrial support services (-4.4 points), life insurance (-2.2 points), construction and materials (-1.6 points) and real estate investment and services (-1.2 points). All other moves were one percentage point or less. Reflecting its concentrated, stock-led approach, BGUK’s active share remains high at 92%, broadly in line with its long-term average.
BGUK’s portfolio still looks very different from the benchmark. It has typically traded at a valuation premium, reflecting stronger expected earnings and sales growth, and it also keeps a clear mid-cap bias. This is not a deliberate positioning choice, but a result of bottom-up stock selection and where the managers see the best opportunities.
Portfolio activity
Reflecting the managers’ low-turnover approach, only a small number of stocks typically enter or leave the portfolio each year. In the year ended 30 April 2026, just three holdings were fully sold: FD Technologies, acquired by TA Associates in July 2025; FDM Group, sold as the managers felt the long-term growth case had weakened after disappointing strategy execution, especially overseas expansion, and as AI increased uncertainty over demand for junior technology consultants and IT staffing; and Just Group, acquired by Brookfield Wealth Solutions in April 2026. Two new holdings were added: Spirax and Greggs, discussed below.
Spirax Group – world-class industrial compounder that’s cyclically, rather than structurally, depressed
Figure 2: Spirax share price (GBp)
Spirax Group (www.spiraxgroup.com) is a specialist engineering company focused on thermal-energy management and fluid technology. It supplies steam-control systems, electric thermal solutions and precision pumps for demanding industrial processes where reliability, efficiency and technical support matter. Its network of around 2,000 specialist sales engineers works with customers to identify inefficiencies and design tailored systems to improve safety, productivity and energy efficiency. BGUK’s managers believe this supports long-term customer relationships, recurring aftermarket revenues, pricing power, high barriers to entry and opportunities to sell more products over time. Spirax operates in fragmented specialist markets, giving it scope to take share from smaller competitors. It also benefits from structural growth themes including industrial decarbonisation, electrification and biopharmaceutical production.
The shares weakened as demand normalised after strong pandemic-era growth, alongside customer destocking and weaker industrial activity. The market appears to see this as a sign that Spirax’s past growth rate may not be sustainable. BGUK’s managers disagree and view the slowdown as cyclical, not a sign of weaker competitive advantages or long-term prospects.
They invested after the share price de-rating, believing it offered an attractive entry point into a high-quality business. As industrial spending recovers, Spirax could benefit from stronger organic growth, better factory utilisation, margin recovery, continued market-share gains and selective acquisitions. This could support returns from both earnings growth and a recovery in the valuation multiple.
Greggs – a value-led consumer growth business with a meaningful store-opening runway
Greggs (www.greggs.com) is the UK’s largest bakery-led food-on-the-go retailer, with shops on high streets, retail parks, transport hubs, roadside sites and drive-throughs. Its vertically integrated model, where it makes and distributes much of its own food, helps it control quality, availability and costs. Growth is being driven by new shop openings, longer opening hours, and expansion into evening trade and delivery.
Figure 3: Greggs share price (GBp)
BGUK’s managers think Greggs is often seen as a mature chain, especially given slower like-for-like sales growth and recent pressure on margins. Weaker consumer spending and higher ingredient, energy and wage costs have been headwinds, but margins have also been held back by a large investment programme to support future growth.
Greggs is investing over £1bn between 2022 and 2026 in manufacturing and distribution. These facilities add costs before they are fully used, but should support a much larger shop base and higher sales volumes, with attractive returns as capacity fills. The managers believe Greggs’ brand and value remain the main growth drivers. Vertical integration supports a strong cost advantage, and recent investment has strengthened its operational position. As capex slows, efficiency, cash generation and returns from new shops should improve, supporting earnings growth over the next five years and beyond.
Top 10 holdings
Figure 4: Top 10 holdings as at 30 June 2026
| Holding | Sector | Business | Portfolio weight 30 June 2026 (%) | Portfolio weight 30 June 2025 (%) | Percentage point change |
|---|---|---|---|---|---|
| Games Workshop | Consumer discretionary | Tabletop games manufacturer/retailer | 7.8 | 6.7 | 1.1 |
| AJ Bell | Financials | UK wealth manager | 5.4 | 5.0 | 0.4 |
| Volution Group | Industrials | Ventilation equipment supplier | 4.6 | 6.1 | (1.5) |
| Softcat | Technology | IT reseller and infrastructure solutions | 4.5 | 3.5 | 1.0 |
| Wise | Financials | Online global FX money transfer | 4.1 | 4.7 | (0.6) |
| Howden Joinery | Industrials | Manufacturer/distributor of kitchens to trade | 4.1 | 4.1 | – |
| 4imprint | Communications | Promotional merchandise | 4.1 | 2.6 | 1.5 |
| Renishaw | Industrials | Metrology products | 4.0 | 2.4 | 1.6 |
| Legal & General | Financials | Insurance and investment management | 4.0 | 3.3 | 0.7 |
| Moonpig Group | Consumer discretionary | Online greetings card and gifting platform | 3.7 | 3.2 | 0.5 |
| Total of top five | 26.4 | 28.6 | (2.2) | ||
| Total of top 10 | 46.4 | 48.3 | (1.9) |
Figure 4 shows BGUK’s top 10 holdings at 30 June 2026 and how they have changed since 30 June 2025, which was the latest data when we last published. In line with the managers’ long-term, low-turnover approach, most of these holdings will be familiar to regular followers of BGUK’s portfolio updates and our research on the trust.
New entrants to the top 10 are 4imprint, Renishaw, Legal & General and Moonpig. Holdings that have dropped out are Autotrader, Experian, St. James’s Place and Just Group. We cover some of the more notable changes in the next few pages. Other holdings are discussed in our previous notes.
Figure 5: Games Workshop share price (GBp)
Games Workshop (7.8%) – trimmed on the back of strong performance
Games Workshop (www.warhammer.com) is a British manufacturer of products for playing fantasy tabletop games, using figurines that the customers paint themselves, and is best known for its Warhammer and Warhammer 40,000 series of products.
Games Workshop has been trimmed after a strong share price run. However, BGUK’s managers still like the company, citing its pricing power, high margins, growing international presence, and the chance to earn more from Warhammer through licensing and its partnership with Amazon.
AJ Bell (5.4%) – benefitting from a shift towards self-directed retirement investing
Figure 6: AJ Bell share price (GBp)
AJ Bell (www.ajbell.co.uk) provides a share dealing platform and related financial services to UK investors, serving both business-to-business and direct-to-consumer customers. It positions itself as a low-cost provider and has been gaining market share while some competitors have struggled to stay competitive.
Like Games Workshop above, this holding has been trimmed after a strong performance. BGUK’s managers remain positive on AJ Bell’s outlook and see it as a long-term winner from the shift towards self-directed retirement saving, supported by its scale, customer service and competitive pricing.
Volution Group (4.6%) – benefitting from a structural trend to improve air quality
Figure 7: Volution share price (GBp)
Volution Group (www.volutiongroupplc.com) makes and supplies ventilation and indoor air-quality products, from extractor fans to heat recovery systems. Its main markets are the UK, Continental Europe and Australasia, and it operates through 17 brands across these regions. As discussed in our last two notes, BGUK’s managers see a long-term trend towards improving air quality, supported by environmental rules in building and construction. They note that Volution’s heat recovery ventilation systems are already helping customers meet new energy efficiency building standards. BGUK’s managers have trimmed the position after strong performance, but remain positive as they believe these trends could support organic growth for years to come.
Softcat (4.5%) – position added to following AI-related sell off
Figure 8: Softcat share price (GBp)
Softcat (www.softcat.com) is a reseller of IT infrastructure, including software and hardware, mainly to UK SMEs. It has around 10,200 active customers, including BGUK’s manager, and benefits from the long-term rise in IT spending. Softcat’s staff turnover is very low, which helps it build stronger, longer-lasting customer relationships than many peers.
In its January half-year results, Softcat reported 23% growth in gross profit and 27% growth in operating profit, leading management to upgrade full-year profit guidance. Even so, the shares were de-rated as investors worried AI would reduce demand for IT resellers and other channel partners. BGUK’s managers think these concerns are misplaced and have increased the holding. They believe AI is making enterprise IT more complex, adding challenges around cloud architecture, data readiness, governance, and compliance.
This should increase demand for Softcat’s advice and strengthen its ability to help customers manage a complex technology set-up with multiple suppliers, particularly in cybersecurity
Wise (4.1%) – taking substantial market share from incumbents
Figure 9: Wise share price (GBp)
Wise (wise.com) is a London-based foreign exchange transfer business offering an online platform to send and receive money internationally at low cost. By using local accounts and connecting directly to payment systems in more than 80 countries, Wise can move money faster and more cheaply than traditional correspondent banks. BGUK’s managers say higher volumes lower unit costs, allowing Wise to cut prices and attract more customers.
BGUK’s managers believe Wise still has significant room to grow. Despite processing about £180bn of payments, it handles around 5% of consumer cross-border transfers and less than 1% of the SME market. They expect growth from adding customers, expanding into new markets, and securing more bank partnerships where banks use Wise’s infrastructure instead of building their own.
Performance
Up-to-date information on BGUK and its peers is available on the QuotedData website.
As discussed in previous notes, financial markets have been disrupted since Baillie Gifford took over management of the trust in June 2018. However, as shown in Figure 10, the biggest impact on growth stocks, and therefore BGUK’s relative NAV and share price performance, came from rising inflation and expectations of higher interest rates in late 2021 and the first half of 2022.
The gap then stabilised as inflation fell and interest rates eased, but it has widened again as inflation and rate expectations rose, first after Trump’s Liberation Day tariffs and more recently due to the war in Iran. We still believe there is significant catch-up potential.
Figure 10: BGUK’s NAV total return relative to various indices, over five years to 31 July 2026
Figure 11: Cumulative total return performance over periods ending 31 July 2026
| 3 months (%) | 6 months (%) | YTD (%) | 1 year (%) | 3 years (%) | 5 years (%) | BG tenure1 (%) | 10 years (%) | |
|---|---|---|---|---|---|---|---|---|
| BGUK NAV | 6.4 | 6.0 | 6.4 | 6.2 | 29.9 | 8.0 | 37.0 | 67.6 |
| BGUK share price | 6.3 | 6.3 | 7.8 | 8.2 | 37.8 | 3.5 | 34.7 | 73.1 |
| MSCI UK | 5.2 | 8.5 | 11.8 | 23.6 | 58.1 | 90.4 | 93.5 | 136.5 |
| MSCI UK Growth | 0.9 | 2.6 | 2.3 | 6.6 | 24.9 | 38.7 | 77.5 | 99.4 |
| MSCI World | 5.3 | 10.0 | 10.4 | 18.7 | 59.5 | 79.5 | 168.0 | 242.2 |
Results for the year ended 30 April 2026
For its financial year ended 30 April 2026, BGUK achieved NAV and share price total returns of 15.6% and 18.2% respectively. By comparison, the MSCI UK Index returned 26.6% and the MSCI UK Growth Index 10.9%. BGUK’s NAV return was also below its All-Share benchmark (25.2% in the annual report), mainly due to no exposure to oil & gas, mining and banks. Stock selection also detracted, as platform and software-related shares fell in the second half on fears of AI disruption.
Top positive contributors for the year to 30 April 2026
Figure 12: Top five positive contributors to relative returns
| Stock | Total return (%)1 | Contribution (%) |
|---|---|---|
| Renishaw | 115.9 | 1.7 |
| Just Group | 56.2 | 1.5 |
| Unilever2 | (13.0) | 1.3 |
| Molten Ventures | 111.0 | 1.0 |
| 3i2 | (38.2) | 0.9 |
Figure 12 lists the top five contributors to performance for the year ended 30 April 2026. As noted above, Just Group was acquired during the year. Unilever and 3i feature in the list because both performed poorly during the period, and neither was held within BGUK’s portfolio.
Figure 13: Renishaw share price (GBp)
Renishaw is a leading British engineering group focused on precision measurement, additive manufacturing and analytical instruments. It serves industries including aerospace, electronics and healthcare, supplying metal 3D-printing and neurosurgical systems.
After a weak period during BGUK’s FY2025, when its February 2025 interim results missed expectations and the shares fell on Trump’s tariff plans in April 2025, performance improved strongly in FY2026 as tariff worries eased and the core business proved resilient. BGUK’s managers have trimmed the holding after this rise but believe the long-term case remains intact. They point to key growth drivers: more factory automation, tighter precision needs in semiconductors and aerospace, reshoring and local production, and growth in metal additive manufacturing.
Figure 14: Molten Ventures share price (GBp)
Molten Ventures (moltenventures.com) is a closed-end investment company providing venture capital to UK and European technology firms. It invests at an early stage, typically from Series A onwards, after seed funding.
BGUK’s managers hold Molten because it has a generally strong record of growing NAV and delivering good realisations. They also note that private companies have been out of favour, leaving Molten trading at a large discount to NAV even though most of its core portfolio has performed in line with, or ahead of, expectations. This proved right in FY2026: its largest holdings performed strongly and the discount to NAV narrowed.
Top detractors for the year to 30 April 2026
Figure 15 lists the top five detractors from for the year ended 30 April 2026. Softcat is discussed in the asset allocation section. With the exception of HSBC, which features as it performed well during the period and was not held by BGUK, all the other large detractors were hit by the “SaaSpocalypse”.
Figure 15: Top five negative contributors to relative returns
| Stock | Total return (%)1 | Contribution (%) |
|---|---|---|
| Autotrader | (40.0) | (3.5) |
| HSBC2 | 115.9 | (2.2) |
| Experian | (26.7) | (1.9) |
| Rightmove | (40.0) | (1.6) |
| Softcat | (15.4) | (1.3) |
Peer group
BGUK sits in the five-member UK All Companies sector, shown in Figures 16 and 17. While the sector is growth-focused, BGUK has an even stronger bias towards growth. Fidelity Special Values and Aurora UK Alpha are more value-tilted, while Schroder UK Mid Cap and Mercantile invest more in smaller companies.
Peer group performance
Please click here to visit QuotedData.com for a live comparison of the UK all companies peer group.
Baillie Gifford took over BGUK’s management at the end of June 2018 after a period of weak relative performance under the previous manager. The following eight years have been difficult for markets, especially for growth stocks. UK equities have also been out of favour with international investors, with smaller companies hit hardest, which has dragged on longer-term sector returns. BGUK’s strong tilt towards growth has left it more exposed than most.
Figure 16: Peer group cumulative NAV total return performance (annualised) to 31 July 2026
| 1 month (%) | 3 months (%) | 6 months (%) | 1 year (%) | 3 years (%) | 5 years (%) | 10 years (%) | |
|---|---|---|---|---|---|---|---|
| BGUK | 3.0 | 6.4 | 5.0 | 6.5 | 9.0 | 1.1 | 4.9 |
| Aurora UK Alpha | 2.2 | 11.3 | (4.6) | 3.7 | 6.6 | 5.5 | 7.8 |
| Fidelity Special Values | 6.6 | 9.0 | 6.1 | 19.9 | 20.0 | 13.4 | 11.1 |
| Mercantile | 2.7 | 4.4 | 5.1 | 11.4 | 12.5 | 1.9 | 6.4 |
| Schroder UK Mid Cap | 8.1 | 5.6 | 0.3 | 7.9 | 10.1 | 2.8 | 6.9 |
| BGUK rank | 3/5 | 3/5 | 3/5 | 4/5 | 4/5 | 5/5 | 5/5 |
| Sector median | 3.0 | 6.4 | 5.0 | 7.9 | 10.1 | 2.8 | 6.9 |
More recently, investors have started to look beyond the US, aside from a small group of mega-cap technology stocks that has driven much of that market’s performance. The UK has benefited so far, led by larger companies. While inflation has risen recently, the broader trend still points to lower interest rates as central banks respond to slowing economies. This should support growth stocks, and both trends may have further to run.
As Figure 17 shows, BGUK is the smallest trust in the sector by market capitalisation, although it is similar in size to Aurora and Schroder UK Mid Cap. Despite widespread share buybacks, the sector’s average market capitalisation has risen slightly since our last report. BGUK has the sector’s second-widest discount, broadly in line with Aurora and Mercantile, and this could narrow if growth stocks continue to outperform.
BGUK’s ongoing charges are slightly above the peer-group average. However, this average is pulled down by Aurora, which charges no base management fee but does levy a performance fee, and Mercantile, whose larger size brings economies of scale. BGUK’s gearing, measured at the end of June 2026, is above the sector average but not excessive. Like most of its peers, it does not charge a performance fee. BGUK has traditionally offered a relatively low yield, slightly below the sector average, although it is currently modestly above it.
NAV volatility has fallen across the sector since our last note. BGUK has historically been among the least volatile in its peer group, but has slipped down the rankings as some peers’ volatility has fallen faster.
Figure 17: Peer group comparison – size, ongoing charges, discount, and yield as at 4 August 2026
| Market cap (£m) | Ongoing charges (%) | Perf. fee | Premium / (discount) (%) | Dividend yield (%) | Net gearing (%) | |
|---|---|---|---|---|---|---|
| BGUK | 237 | 0.76 | No | (10.2) | 2.8 | 8 |
| Aurora UK Alpha | 275 | 0.351 | Yes1 | (11.7) | 1.8 | 0 |
| Fidelity Special Values | 1,520 | 0.68 | No | 0.7 | 2.0 | 6 |
| Mercantile | 1,777 | 0.49 | No | (9.7) | 2.9 | 12 |
| Schroder UK Mid Cap | 250 | 0.92 | No | (5.5) | 2.9 | 3 |
| BGUK rank2 | 5/5 | 4/5 | 4/5 | 3/5 | 2/5 | |
| Sector median | 275 | 0.68 | (9.7) | 2.8 | 6 |
Dividend
BGUK’s main aim is capital growth. Dividends are paid only as needed to keep its investment trust status, so income is likely to be a small part of total returns despite the UK market’s typically higher yield.
The trust pays one final dividend each year after AGM approval, usually in September. For the year ended 30 April 2026, the board has proposed a final dividend of 6.2p per share, up from 5.7p in 2025. This is a 2.8% yield based on the 223.0p share price at 4 August 2026. Revenue earnings were 6.23p per share, so the dividend is covered.
Revenue earnings have exceeded dividends in recent years, helping BGUK build its revenue reserve. At 30 April 2026, this was £17.9m, or 16.53p per share, up from £17.6m, or 13.57p per share, two years earlier. BGUK may also pay dividends from capital profits.
Figure 18: BGUK revenue income and dividend by financial year (ended 30 April)1
Premium/(discount)
Figure 19: BGUK premium/(discount) over five years to end July 2026
On 28 January 2025, BGUK announced an updated buyback policy whereby share repurchases would be used with the aim of maintaining a single digit discount to the trust’s NAV per share, in normal market conditions. As illustrated in Figure 19, this has been effective, with BGUK’s discount stepping in and buybacks rising since it was introduced. Figure 19 also shows the discount has been less volatile.
In the year before the policy, BGUK traded at an average discount of 14.5%, ranging from 10.9% to 16.6%. Since the policy, the average discount has fallen to 9.8%, ranging from 8.1% to 11.3%. As at 4 August 2026, BGUK traded at a 10.1% discount.
Structure
Figure 20: BGUK ongoing charges ratio (%)1
Fees and costs
BGUK’s board has secured a temporary cut in its management fee from 0.50% to 0.40% of NAV, effective from 1 July 2026 until 30 April 2029, the calculation date for the trust’s performance-triggered tender offer. The fee is expected to return to 0.50% after that, assuming the trust continues to follow the tender process. There is no performance fee. Baillie Gifford can end the management agreement with six months’ notice and BGUK with three months’ notice. The manager also provides company secretarial and administrative services within this fee.
The fee is allocated 30% to revenue and 70% to capital, reflecting the board’s view of the long-term mix of returns. The ongoing charges ratio for the year to 30 April 2026 was 0.76%, up 5 basis points from 0.71% a year earlier, mainly due to the impact of share buybacks despite lower overall costs.
Capital structure and life
BGUK has one class of ordinary share listed on the premium segment of the London Stock Exchange. At 31 July 2026, it had 112,484,853 shares in issue, including 6,332,402 held in treasury and 106,152,451 in general circulation. The trust can borrow up to a net gearing limit of 20% of net assets, which the board reviews periodically to reflect market conditions.
BGUK has a strong retail investor base. Major direct-to-consumer platforms account for around 25% of the share register, with wealth managers and intermediaries making up a further 35%.
Shareholders vote on the trust’s continuation every five years at the AGM. The next scheduled vote is in 2029, with an additional vote planned for 2027. A performance-triggered tender is also planned for 2029 if BGUK’s NAV per share underperforms the All-Share over the five years to 30 April 2029.
BGUK’s year-end is 30 April. Annual results are usually released in June or July, with interim results in November or December, and AGMs typically held in September. BGUK pays a single final dividend after the AGM, if required.
Management team
Iain McCombie joined Baillie Gifford in 1994 and has spent the majority of his career as an investment manager in the UK equity team. He became a partner in 2005. Iain graduated with an MA in Accountancy from the University of Aberdeen, and qualified as a Chartered Accountant.
Milena Mileva joined Baillie Gifford in 2009 and is an investment manager in the UK equity team. She became a partner in 2022. Milena graduated with a BA in Social & Political Sciences from the University of Cambridge in 2007 and an MPhil in Politics from the University of Oxford in 2009.
James Smith joined Baillie Gifford in 2022, and prior to joining the firm, worked as a senior investment manager at ADIA in Abu Dhabi covering UK Equities, having begun his career at Martin Currie in Edinburgh in 2012. James graduated with a BSc (Hons) in Economics from UCL in 2010.
Board
All directors retire and stand for re-election annually.
BGUK’s board comprises five non-executive directors, all considered independent of the investment manager. Newly appointed directors must stand for election at the next AGM, while all directors retire and seek re-election annually. The directors have served for an average of 5.2 years. Andrew Westenberger, chair of the audit committee, is the longest-serving director, with 9.3 years on the board, and is not standing for re-election at September’s AGM. Seema Patterson will become audit chair following his retirement. The directors have no other shared directorships. The company’s articles cap total annual directors’ fees at £250,000. Average fees for individual board roles have increased by 6.7% for the current financial year compared with FY26.
Figure 21: Board member – length of service and shareholdings
| Director | Position | Date of appointment | Length of service (years) | Annual fee (GBP)1 | Shareholding2 | Years of fee invested3 |
|---|---|---|---|---|---|---|
| Neil Rogan | Chairman | 1 January 2024 | 2.6 | 49,200 | 135,607 | 6.1 |
| Andrew Westenberger | Chair of the audit committee | 5 May 2017 | 9.3 | 39,800 | 20,000 | 1.1 |
| Ruary Neill | Senior independent director | 15 November 2018 | 7.7 | 34,300 | 36,707 | 2.4 |
| Cathy Pitt | Director | 5 August 2021 | 5.0 | 32,800 | 21,501 | 1.5 |
| Seema Paterson | Director | 2 January 2025 | 1.6 | 32,800 | 20,000 | 1.4 |
| Average (service length, annual fee, shareholding, years of fee invested) | 5.2 | 37,780 | 46,763 | 2.5 |
Since our last report, three BGUK directors have made significant share purchases. Neil Rogan bought 50,746 shares at 204.0p on 3 December 2025, Catherine Pitt bought 5,014 shares at 198.3p on 5 March 2026, and Seema Paterson bought 10,000 shares at 212.51p on 1 July 2026. All BGUK directors hold shares in the company, and on average their holdings are equivalent to 2.5 years of fees, up from 1.8 years when we last published.
Neil Rogan (chairman) was appointed to BGUK’s board in January 2024 and became chairman on 14 June 2024. He is also chairman of Invesco Asia Trust and a director of JPMorgan Global Growth & Income Trust. Previously, he held investment roles at Touche Remnant, Flemings and Gartmore/Henderson, where he was head of global equities. He has also chaired Murray Income Trust and served as a director of The Scottish Investment Trust.
Andrew Westenberger (chairman of the audit committee) joined BGUK’s board in 2017 and has chaired the audit committee since then. He is chief executive of Hurst Point Group. Previously, he was chief financial officer of Tysers Insurance Brokers and group finance director of Brewin Dolphin Holdings and Evolution Group. He has also served as a non-executive director and trustee of the Chartered Institute for Securities & Investment and held senior finance roles at Barclays Capital and Deutsche Bank. Andrew is a chartered accountant.
Ruary Neill (senior independent director) joined BGUK’s board in 2018 and became senior independent director in 2021. He is also a director of JPMorgan Emerging Markets Investment Trust. Previously, he worked in investment banking at UBS and held roles in Asian equity markets at UBS and Schroder Securities.
Cathy Pitt (director) joined BGUK’s board in 2021. A former consultant partner at the law firm CMS, she has over 20 years’ experience advising boards and asset managers on corporate matters. She is also a non-executive director of Gresham House Energy Storage Fund and the deputy chair of the Association of Investment Companies.
Seema Paterson (director) joined BGUK’s board in 2025. She is chief financial officer and a board director of This Works Products, chairs the audit committee of CQS Natural Resources Growth and Income, and serves on the board of youth employment charity Resurgo Trust. Previously, she worked in mergers and acquisitions at Société Générale and corporate finance at Collins Stewart. Seema is a chartered accountant and will – as mentioned above – take on the role of audit chair for BGUK later this year. Seema will also become a non-executive director of AVI Global Trust Plc with effect from 1 September and chair of its audit committee when the incumbent retires.
SWOT analysis
Figure 22: SWOT analysis for BGUK
| Strengths | Weaknesses |
|---|---|
| BGUK offers a differentiated way of accessing the UK equity market, with exposure to areas such as technology-enabled services, intellectual property, specialist industrials, digital platforms and innovative consumer businesses in contrast to the FTSE All-Share’s relatively heavy exposure to banks, energy companies, miners and mature dividend payers.
BGUK’s portfolio is concentrated and comprises the managers’ highest-conviction ideas. Successful investments can make a meaningful contribution to returns. BGUK benefits from Baillie Gifford’s extensive research resources and growth-investing culture. Its managers are able to look beyond short-term volatility and support companies through periods of investment or temporary uncertainty. UK equities are cheap versus comparable overseas markets, while growth-orientated UK businesses have suffered from relatively weak investor demand. A recovery in sentiment towards UK growth companies could provide a meaningful tailwind. The board has demonstrated a clear prioritising of shareholder interests in pursuit of its single-digit discount control policy, effected through share buybacks, increased emphasis on marketing, working closely with the manager to evolve the investment approach, the additional continuation vote in 2027, and performance triggered tender in 2029. |
BGUK’s focus on growth makes it sensitive to changes in interest rates, inflation expectations and investor risk appetite. When markets favour inexpensive, high-yielding or economically sensitive companies, as it has in recent years, the trust may lag the broader UK market for an extended period.
Although performance has improved from the lows reached during the growth-stock sell-off, the trust has materially underperformed its benchmark over five and 10 years. BGUK has work to do to rebuild confidence in the strategy and attract new investors. While a concentrated portfolio can magnify the managers’ successes the reverse is also true. Disappointing execution, weaker competitive positions or overly optimistic growth assumptions at one or more large holdings can also have a meaningful impact on NAV. BGUK’s focus is on capital growth, and the dividend is a secondary consideration. The trust is therefore unlikely to appeal to investors seeking a high or steadily growing level of income, particularly when compared with many other UK equity investment trusts. Private investments are valued rather than priced continuously in the market. Although the weighting is modest – 2.5% as at 30 April 2026 – valuations can be less transparent and may adjust with a delay when market conditions deteriorate. |
| Opportunities | Threats |
| A renewed allocation to UK equities by domestic pension funds, wealth managers or international investors could disproportionately benefit the sort of differentiated, high-quality companies held by the trust. Takeover activity may also highlight the gap between public-market valuations and the strategic value of UK-listed businesses.
A broadening of market leadership away from the very large US tech names could benefit BGUK, particularly if smaller companies, specialist industrials and domestically listed growth businesses return to favour. Many holdings are exposed to long-term trends that are not wholly dependent on the strength of the UK economy – for example, the digitisation of financial services, growth in software and data, greater energy efficiency, and automation. Several portfolio companies generate significant revenues overseas, giving the trust more global exposure than its UK focus might suggest. BGUK may invest in private companies (within prescribed limits). This gives it access to potentially attractive UK growth businesses before they reach public markets, and allows the managers to maintain relationships with companies across different stages of their development. BGUK is trading at a high-single-digit discount, which has the potential to narrow, particularly if investor confidence in UK growth investing and performance improves from here. |
Growth equities are sensitive to discount rates. If interest rates remain higher for longer, or if bond yields rise again, the market will likely place lower valuations on long-duration growth assets. However, this should tend to reverse out over the longer term.
Although many holdings have international operations, the portfolio retains exposure to UK consumers, housing activity, business investment and financial markets. Weak economic growth, higher taxes or depressed consumer confidence could weigh on earnings and valuations. Takeovers can crystallise value for individual holdings, but the continuing acquisition or overseas relisting of successful UK growth companies would shrink the trust’s investible universe. The lack of new listings could make it progressively more difficult to construct a diversified portfolio of high-quality UK growth equities, although BGUK can increase its exposure to private companies. Growth companies often need to reinvest to fund that growth. Where such investments do not translate into durable earnings or cash generation as expected, their valuations can fall sharply. Continued outflows from UK equity funds and weak demand for investment trusts could keep the shares on a wide discount even if NAV performance improves. This could increase pressure on the board to undertake more aggressive buybacks, corporate action or changes to the investment strategy. |
Bull vs. bear case
Figure 23: Bull vs. bear case for BGUK
| Aspect | Bull case | Bear case |
|---|---|---|
| Performance | If BGUK’s holdings deliver sustained earnings growth that is recognised by the market, a relatively small number of successful investments could make a meaningful contribution to returns. There has been a very recent improvement in performance. | BGUK has had a difficult few years of relative underperformance, largely due to growth investing being out of favour. However, this raises questions over whether the managers’ growth style can outperform in an environment of higher interest rates, less-abundant liquidity and greater emphasis on current cash flows. The concentrated portfolio also increases stock-specific risk. |
| Dividends | BGUK focuses on capital growth, with income being a biproduct of stock selection. However, businesses capable of retaining capital and reinvesting it at high rates of return may create more value over time than mature companies distributing most of their earnings. As portfolio companies grow and become more cash-generative, some may develop the capacity to pay larger dividends without compromising their expansion.
As the annual dividend is purely to maintain BGUK’s investment trust status, the trust has built up a revenue reserve. |
BGUK is unlikely to appeal to investors seeking a high or dependable level of income. Its focus on growth companies means that many holdings retain cash to fund expansion rather than paying substantial dividends.
Dividend growth may therefore lag that of more conventional UK equity income trusts. In difficult economic conditions, some portfolio companies may also reduce or suspend distributions to preserve cash for investment. |
| Outlook | If the outlook for interest rates and bond yields improves materially, BGUK would benefit.
UK equities remain inexpensive relative to many overseas markets, with international investors underweight the UK. A recovery in domestic or international demand for UK assets could lead to a meaningful rerating, particularly for growth companies that have continued to make operational progress. Many holdings are exposed to secular trends rather than purely cyclical growth, meaning they could continue to expand, even if the UK economy remains relatively weak. |
Persistently high interest rates would be a significant headwind to BGUK’s portfolio companies’ valuations.
A weak UK economy could also affect businesses exposed to domestic consumers, housing activity, financial markets and corporate investment. Higher taxation, wage inflation and regulatory costs may place additional pressure on margins. The outlook also depends on portfolio companies executing ambitious growth plans. Expansion into new markets, investment in infrastructure or product development may take longer, cost more or generate lower returns than expected. |
| Discount | BGUK’s board has a policy of using share repurchases to keep BGUK’s discount in single figures. This policy has been very effective since its introduction in January 2025.
Share repurchases at current high-single-digit discounts are NAV-accretive for remaining holders. The current discount could narrow or even move to a premium if sentiment towards UK equities and growth investing improves or if there is an improvement in performance. |
If rising UK inflation leads to a renewed period of underperformance for growth investing, BGUK’s shares could see increased selling pressure, putting the discount control measure under pressure. Poor performance could also have the same effect.
Continued repurchases may also shrink the trust, reduce liquidity and put upward pressure on the ongoing charges ratio as fixed costs are spread across a smaller asset base. |
| Other | Takeover activity could crystallise value within the portfolio. Overseas buyers and private-equity firms may be willing to pay significant premiums for UK businesses whose strategic value is not reflected in their public-market ratings. | The UK-listed growth universe is relatively limited and may shrink further as successful companies are acquired, delist or choose to list overseas. This could make it increasingly difficult to construct a diversified portfolio of high-quality UK growth equities. |
Previous publications
Figure 24: QuotedData’s previously published notes on BGUK
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