Fund Focus: where Baillie Gifford has - and hasn’t - recovered

Spare a thought for any fan of Baillie Gifford’s funds in recent years. 

With its punchy growth investment style and focus on future trends, the house bagged some huge returns in the pandemic but became one of the most obvious victims of a sell-off, triggered by interest rate rises in 2022.

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Those who stayed invested might now wish to pop a cork, because the signs of recovery have appeared. 

That has seemed most obvious for flagship trust Scottish Mortgage Ord (LSE:SMT) which, like fellow Space Exploration Technologies Corp Class A (NASDAQ:SPCX) holders Schiehallion Fund Ord (LSE:MNTN), Baillie Gifford US Growth Ord (LSE:USA) and Edinburgh Worldwide Ord (LSE:EWI), saw a big pop for its shares ahead of the Elon Musk company’s initial public offering (IPO) a few weeks ago. 

We even ended up with shares in such trusts moving back to a discount, reflecting the fact that their own shares couldn’t keep up with the SpaceX boost to their portfolios.

And yet, the recovery from the lowest points is yet to fully play out. Investors might need to apply some sensible principles to help them ride things out.

From trough to peak

If we use Scottish Mortgage as an illustration, it generated huge returns in 2020 but actually hit a performance peak in November of that year (which it recently surpassed). 

The fund’s woes began with the emergence of a Covid vaccine on 9 November 2020, and really intensified when interest rate rises kicked in further down the line. With their similar investment style, other Baillie Gifford funds have had a similar experience.

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With the acceptance that this is a selective time frame – and that you may have sensibly bought in during the bad times – it’s notable that the firm’s funds have had a hard slog towards recovery since then.

To illustrate that, I’ve looked at their total returns from “Vaccine Day” to now and set these against the returns from a fund’s stated benchmark over the same period. 

This shows that the recovery still has a way to go, even if recent performance has in many cases been good. 

I’ve tended to give one example of a fund in a given area if the company offers a trust and an open-ended fund with the same focus, and have mainly tended to pick the best performer.

The winners

The first table shows the best performers from across the Baillie Gifford stable in outright terms, and there is some good news here. 

Baillie Gifford Pacific B Acc (0606323), which likes growth and tech and counts Samsung Electronics Co Ltd DR (LSE:SMSN), Taiwan Semiconductor Manufacturing Co Ltd ADR (NYSE:TSM), SK Square, SK Hynix, MediaTek and Tencent Holdings Ltd (SEHK:700) among its top holdings, has comfortably outperformed the MSCI AC Asia ex Japan index. 

Its trust equivalent, Pacific Horizon Ord (LSE:PHI), is slightly ahead of the index over this time frame.

Other “winners” have posted solid returns but have failed to keep up with rip-roaring equity markets. 

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Scottish Mortgage and its more measured sibling Monks Ord (LSE:MNKS) are well behind the FTSE All World and FTSE World, respectively, with the more docile equity income play Scottish American Ord (LSE:SAIN) not keeping up with global shares either. 

The latter, in its defence, can have a defensive profile at points, such as when it suffered less than broader markets in 2022.

Schiehallion, which focuses on private companies and might look enticing after its SpaceX success, has returned around 46%. I’ve omitted its benchmark, given that it tracks performance against the fairly disparate Association of Investment Companies (AIC) Growth Capital sector. 

Source: FE Analytics. Past performance is not a guide to future performance.

The losers

The results get grimmer as we progress further down the table. 

The firm’s China-focused trust has struggled in particular during a tough few years for that market (although it enjoyed a big rally in 2025), while its once-beloved Japan franchise continued to look pretty pedestrian until a strong showing last year. 

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Interestingly, the Baillie Gifford US Growth trust is a long way behind the S&P 500, even after a burst of good recent performance. Edinburgh Worldwide, which I omit from the table now that it looks likely to fall under control of US activist Saba, sits on a 10% loss.

The investment trust structure does at least add pressure for things to turn around, whether it comes from a board or an activist investor. We saw a bit of this in the latest results for Baillie Gifford UK Growth Trust Ord (LSE:BGUK), released last week, where the trust appointed another co-manager.

Source: FE Analytics. Past performance is not a guide to future performance.

The board warned that “patience is thin” when it comes to performance, adding: “We expect to see a small increase in the number of holdings and an increase in portfolio turnover from less than 5% towards 20% a year as a greater emphasis is put on portfolio construction and sell discipline.”

There’s still much to like about what Baillie Gifford does, from its consistency to the fact that classic growth themes, like artificial intelligence (AI), are a cause of much excitement. 

But a stumble has left some of its funds with plenty of ground to make up against buoyant markets. For those keeping the faith, diversification, pound cost averaging and patience will be your friends.