Interactive Investor

Baillie Gifford cuts fee for top-performing trust

21st September 2021 11:58

Tom Bailey from interactive investor

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Assets in excess of £1 billion will now see a reduced management fee. 

Baillie Gifford has announced that it is changing the fee on its highly popular US Growth trust.

Previously, the Baillie Gifford US Growth (LSE:USA) trust had a management fee of 0.7% on the trust’s first £100 million of net assets. For assets in excess of that, a fee of 0.55% was charged. 

It will still charge 0.7% on the first £100 million of net assets. Assets above £100 million but below £1 billion will also still be charged 0.55%. However, assets in excess of £1 billion will now see a reduced management fee of 0.5%.

The trust currently has £1.05 billion in assets, meaning the new fee will only apply to a relatively small portion of the trust’s assets.

Since its launch in March 2018, the trust has been a strong performer, generating a total return (in sterling returns) of 235.3%. In comparison, the S&P 500 has provided a total return of 84.3%. The trust has also easily outperformed the Association of Investment Companies’ (AIC) IT North America sector average return, which stands at 78.2%.

Managed by Gary Robinson and Kirsty Gibson, the trust has a particular focus on US growth and tech companies. Its biggest holdings currently include Shopify (NYSE:SHOP), Amazon (NASDAQ:AMZN), Twilio (NYSE:TWLO) and Wayfair (NYSE:W). The trust also has the ability to invest up to 50% in unlisted companies. Its August factsheet shows the portfolio includes 52 private companies, which in aggregate accounted for 20.8% of total assets.

More recently, the trust has experienced poorer performance. Year to date, the trust has returned 2.7%. In contrast, the S&P 500 returned 18.2% and the IT North America Sector averaged 16.4%. The trust’s underperformance is largely reflective of the market rotation away from growth and quality stocks towards value and cyclicals.

James Budden, director of marketing and distribution at Baillie Gifford, said: “US Growth Trust assets now exceed £1 billion, and this change will benefit shareholders as the trust continues to grow. Across our whole fund and trust range, we aim to be as competitive on fees as possible as they are the only element of investment returns which can be guaranteed. This latest fee reduction re-affirms our commitment to provide investors with value for money.”

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