Two new entries, significant reshuffling and continued investor flight from passives.
Two Baillie Gifford funds have parachuted into the monthly ranking of the top 10 most-bought funds, according to data from interactive investor’s platform. The Edinburgh-based investment manager now boasts a total of six entries in the list with newcomers Baillie Gifford China and Baillie Gifford Managed in seventh and eighth place, respectively.
Baillie Gifford China counts tech firm Tencent, food delivery service Meituan Dianping, and e-commerce giant Alibaba among its top 10 holdings, while its exposure to Emerging Asia, a part of the world expected to make a speedy recovery from the coronavirus pandemic, has captured investors’ attention. Baillie Gifford Managed, meanwhile, has among its top 10 holdings a range of “lockdown champions”, including Amazon, which, along with other tech stocks, posted exceptionally strong results during the second-quarter US earnings season.
New entrants aside, four other Baillie Gifford funds have risen up the rankings, with Baillie Gifford Long Term Global Growth leapfrogging five places from 10th to fifth place. As the world realises that the pandemic will be of lengthy duration and have long-lasting effects on consumer behaviour, investors are seeking out firms that can thrive during this once-in-a-century event. The fund has a strong weighting to the US and significant exposure to both Emerging Asia and Europe. Portfolio holdings include Netflix, Facebook and Tesla.
Other Baillie Gifford funds in the ascendancy are ethical option Baillie Gifford Positive Change, and Baillie Gifford Global Discovery. Both funds have risen one place to third and fourth, respectively. Baillie Gifford Global Discovery has significant exposure to tech and healthcare, with holdings including Ocado, Teladoc Health, and Chegg, a US edtech firm. In a recent episode of interactive investor’s Funds Fan podcast, manager Douglas Brodie explained that the fund's style of investing is all about “being on commercially relevant frontiers of innovation and long-term structural change”. He added: “The impact of technology extends in our fund well beyond the arbitrary sector definition of technology. [Tech] is so pervasive in so many aspects of our lives now.”
The final Baillie Gifford fund in the top 10 is Baillie Gifford American, which retains its second-place position. The fund’s three-year return figure is an impressive 153%, while its one-year return is 55%. Its current top holding is Canadian e-commerce firm Shopify, which commentators are tipping to challenge Amazon. However, despite impressive performance it is yet to topple Terry Smith’s Fundsmith Equity from the top spot.
As in June, this month’s top 10 contains just two passive funds: Vanguard LifeStrategy 80% Equity and Vanguard’s LifeStrategy 60% Equity, but both are slipping down the list and each fund fell three places to sixth and ninth, respectively. In challenging times such as these, it seems that investors are putting their faith in active fund managers’ stock-picking abilities rather simply buying the market through index trackers.
Polar Capital Global Technology has slipped one place to 10th. This fund has a 75% weighting to the US and top holdings include PayPal, Microsoft and Apple. Fund manager Ben Rogoff told interactive investor’s head of markets Richard Hunter in a recent interview that “the tech sector has done a very good job of keeping the global economy going”. It’s hard to imagine that tech investing will wane in popularity any time soon.
|Rank||Fund||IA sector||Ranking change since previous month||1-year return to 3 Aug||3-year return to 3 Aug|
|1||Fundsmith Equity||Global||No change||4.33%||48.76%|
|2||Baillie Gifford American||North America||No change||55.13%||153.07%|
|3||Baillie Gifford Positive Change||Global||+1||54.69%||123.13%|
|4||Baillie Gifford Global Discovery||Global||+1||30%||94.81%|
|5||Baillie Gifford Long Term Global Growth||Global||+5||61.30%||124.15%|
|6||Vanguard LifeStrategy 80% Equity||Mixed investment 40%-85% shares||-3||-1.98%||15.39%|
|7||Baillie Gifford China||China||New entry||31.54%||46.70%|
|8||Baillie Gifford Managed||Mixed investment 40%-85% shares||New entry||14.73%||39.75%|
|9||Vanguard LifeStrategy 60% Equity||Mixed investment 40%-85% shares||-3||0.40%||15.67%|
|10||Polar Capital Global Technology||Technology and Telecommunications||-1||30.71%||107.15%|
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