Investment trust insider on Baillie Gifford European – James Carthew: great start at Baillie Gifford European Growth
About a year ago, I wrote an article on Baillie Gifford European Growth (BGEU) just as the new management team was preparing to get hold of the former European (EUT) portfolio after its manager Edinburgh Partners was dismissed.
The revamped trust has got off to a phenomenal start. Over the past 12 months the net asset value (NAV) is up by more than 50% and the share price by more than 60%, eclipsing its peers. However, in recent weeks, there has been a bit of a switch around and BGEU is the worst-performing trust in its sector over the past month.
The discovery of a number of viable vaccines has lit the light at the end of the Covid tunnel. This has triggered a resurgence in value-oriented trusts – just look at the huge leap in Temple Bar (TMPL) whose share price is up almost 40% over the past month. Some investors have been taking profits on growth stocks and making the switch.
The team at BGEU think this is misguided. Fund managers Stephen Paice and Moritz Sitte do not feel we are seeing a decisive and persistent switch from growth to value, despite the recent share price moves. They remain convinced that many value stocks have business models that are facing a lot of disruption, which in some cases will prove lethal.
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