Investment trust insider on Baillie Gifford European – James Carthew: why I like the look of the revamped European
Baillie Gifford’s stable of investment companies has expanded in recent years. Last week I met the managers of its latest addition, European Investment Trust (EUT), which is shortly to be renamed Baillie Gifford European Growth (BGEU) when its assets are transferred from Edinburgh Partners in the two weeks.
Stephen Paice and Moritz Sitte already manage £2.4 billion in European equity funds for Baillie Gifford, including the £550 million open-ended Baillie Gifford European Fund. Their idea for BGEU is to replicate that fund within the trust and then take advantage of the closed-end structure to add some smaller companies, some unlisted companies and use some gearing, or borrowing, of around 10%, although the limit will be 20%.
The Baillie Gifford approach to running money is fairly consistent across the firm – don’t try to replicate an index, focus on growing companies, think long-term and think global. One of their key messages is that most of the positive returns, in any given market, are driven by a handful of stocks. The most important thing is to own these and run with them.
In other Baillie Gifford portfolios, the technology sector dominates. The managers say this won’t be the case in BGEU, at least not at present. Europe has lagged the US and Asia in creating world-class technology firms. However, it does have world-class companies in other sectors such as industrials and consumer goods, and this will be the initial focus of the portfolio.
At the annual general meeting in January shareholders will be asked to approve a tweak to the investment objective to allow the trust to hold more stocks with the holdings range rising from 30-50 securities to 30-60.
The plan, when the managers get their hands on the trust, is… read more here