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Out of the 47 Baillie Gifford funds analysed, 42 received a poor-performing 1 or 2 star ratings based their recent 1, 3 & 5 year performance.
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Their funds endured a tough spell of poor performance from 2021 up to October 2022 resulting in large valuation declines. But over the past 18 months many of their funds have shown strong signs of recovery with some ranking among their sectors top performers.
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The Scottish Mortgage Investment Trust PLC is the largest fund under Baillie Gifford’s management, with £13.49 billion in assets. Over the past years, this fund returned growth of 28.95%.
With £225 billion in assets under management as of 2024, Baillie Gifford remains one of the UK’s largest and most respected independent investment firms. Known for its ability to identify and invest in high-growth companies worldwide, Baillie Gifford has established itself as a prominent force within the investment management industry, leveraging its expertise in disruptive, innovative sectors like technology, healthcare, and renewables.
Historically, Baillie Gifford’s growth-focused strategies led many of its funds to outperform sector averages, earning a top-tier reputation. However, the 2021-2022 market downturn had a notable impact on growth-oriented funds, resulting in a sharp decline in valuation across several Baillie Gifford funds. This period of high volatility prompted some investors to pivot to less volatile investment options, with the firm’s performance reflecting the general challenges of high-growth investment during turbulent market phases.
Since 2023, improving market conditions have sparked renewed interest in Baillie Gifford's approach, and the firm has seen a return to strong performance across multiple funds. In this article, we review ten of Baillie Gifford's largest funds, exploring their recent growth and assessing why the firm is once again attracting investor interest as it continues to pursue high-growth opportunities.
Baillie Gifford Fund Performance Summary
We analysed 47 Baillie Gifford funds for performance and sector ranking over the past 1, 3 and 5 years and provided each fund with an overall performance rating between 1 and 5 stars.
Our analysis of their funds’ performance identified that 89% of their funds have underperformed with none of the funds earning top 4 or 5-star ratings.
Baillie Gifford Funds On The Road To Recovery
Global markets entered into a prolonged period of negative growth towards the end of 2021, which had a sizeable impact on all investment funds. But it was the growth focused funds such as those managed by Baillie Gifford that experienced the sharpest declines - the most notable of which being their hugely popular American fund.
Between 17th November 2021 until 30th December 2022 the fund experienced a sharp decline in value as Global markets tumbled.
During this period the fund returned negative growth of -57.95%, compared to the IA North American sector average of -10.04%.
As a consequence of its poor performance, the Baillie Gifford American fund was one the most sold funds in 2022 as spooked investors dumped the fund, with many doing so only to move into lower quality funds with less long term growth potential simply because such funds had less exposure to industry leading companies and therefore experienced less of fall as markets tumbled.
Since the end of 2022, the Baillie Gifford American fund has began a remarkable recovery delivering growth of 62.42%, which was significantly greater than the 26.56% average for the highly competitive North America sector.
It is important to remember that selling off investments during a market downturn is rarely a wise strategy. Many analysts believe that the Baillie Gifford funds, with their depth of quality and long-term growth potential, are likely to yield better returns over the long term. While it can be challenging to remain patient during periods of falling investment values, those who choose to hold onto quality funds like the Baillie Gifford American may experience large short-term losses, but over the course of a long term investment horizon of 5 or more years they could potentially gain much greater returns.
10 Popular Baillie Gifford Funds
The majority of Baillie Gifford’s funds experienced large declines in value following the 2022 market downturn, leading to lower cumulative performance ratings over the past five years - which has significantly impacted their overall performance ratings.
However, many funds have recently shown signs of recovery. Below we feature 10 of Baillie Gifford’s largest funds, which have exhibited strong potential for future growth.
Scottish Mortgage Investment Trust PLC
The Scottish Mortgage Investment Trust, managed by Baillie Gifford, is recognised for its high-growth, innovation-driven investment strategy, with a significant focus on technology, healthcare, and renewable sectors. This approach targets disruptive companies with potential for substantial long-term appreciation, though it often results in greater volatility compared to broader global peers.
Over the past year, the trust delivered a 28.95% return, outperforming the IT Global sector average of 22.73%, as growth stocks rebounded from the 2022 market downturn. However, its three-year return of -40.78% significantly trails the sector average of +2.37%, underscoring the challenges faced by high-growth investments during periods of market stress and rising rates. Over five years, the trust has generated a 71.02% return, well above the sector’s 41.08%, highlighting the strength of its approach over a longer horizon, despite shorter-term fluctuations.
This performance profile suggests that the Scottish Mortgage Investment Trust may be better suited for investors with a long-term perspective and a higher risk tolerance, given its sensitivity to market cycles. While short-term volatility is a notable factor, the trust’s track record indicates robust growth potential during favourable market conditions, particularly for those seeking exposure to innovative, growth-oriented businesses. With market conditions now more favourable for growth strategies, the Scottish Mortgage Investment Trust has resumed its trend of outperforming.
Baillie Gifford Managed
The Baillie Gifford Managed Fund is Baillie Gifford’s largest unit trust, overseeing nearly £5 billion in assets. It follows a balanced investment strategy, blending equities, bonds, and cash across global markets with an emphasis on long-term growth through carefully selected high-quality assets. Known for its strategic allocation towards growth sectors, the fund has a diversified yet growth-oriented approach that seeks to maximise returns over an extended period while managing risk exposure.
In the last year, the fund achieved a return of 16.67%, outpacing the sector average of 13.84% as it benefitted from a partial recovery in global markets. However, its three-year performance of -12.81% trails the sector's average of 8.12%, indicating the impact of challenging market conditions on its growth-oriented assets. Over a five-year horizon, the fund's cumulative growth reached 30.83%, again ahead of the sector average of 27.59%, reflecting its strength in capitalising on long-term trends in technology, healthcare, and sustainable investments.
Baillie Gifford Pacific
The fund manages approximately £3.23 billion in assets and aims to outperform the MSCI AC Asia ex-Japan Index by at least 2% per annum over rolling five-year periods. The fund primarily invests (at least 90%) directly or indirectly in shares of companies in Asia (excluding Japan) and Australasia.
Historically, the fund has demonstrated strong performance, with a notable 65.39% return over the past five years, well above the sector average of 25.53%. This stellar performance ranked the fund 2nd out of 101 funds in its sector, reflecting its ability to capture growth in key Asian markets.
Like all Baillie Gifford funds, the Pacific fund encountered challenges over the past three years, particularly during the market downturn, where it posted a -8.57% loss. This was due to the volatility in tech-heavy and growth sectors in Asia.
After 18 months of poor performance, the fund now seems to have turned a corner. In the past year, it achieved a return of 16.94% and ranked among the top quartile of its sector. This upturn has been supported by investments in high-growth regions like China, India, and South Korea, with significant holdings in companies such as TSMC, Tencent, Samsung Electronics, and Reliance Industries.
Monks Investment Trust
The investment objective of the Monks Investment Trust PLC is to achieve long-term capital growth, by investing globally. It prioritises capital appreciation over income and dividends. The trust employs a patient and disciplined investment strategy, maintaining a diversified global equity portfolio.
The portfolio has significant allocations to North America (around 61%), Europe, alongside emerging markets and Asia. Managed by Baillie Gifford, the Monks Investment Trust PLC oversees £2.65 billion in assets but has struggled in recent years.
Over the past 5 years, it delivered a return of 32.05%, falling short of the sector average of 41.09%. The 3-year performance was particularly poor, with a loss of -16.62%, compared to the sector average of 2.37%. These weak returns led to the fund receiving a 1-star rating, placing it among the worst performers within the IT Global sector.
The trust's underperformance is mainly due to its focus on growth stocks, especially in technology and healthcare, which were negatively impacted by the market's shift from growth to value investing in 2022. Rising interest rates and inflation made investors more skeptical of early-stage growth companies, many of which lacked profitability.
Over the past year, the Monks Investment Trust PLC has shown a strong recovery from previous challenges, delivering an impressive 27.20% return. This positions it among the top 50% in its sector. Strong investments in leading companies like Microsoft, Meta Platforms, and Martin Marietta Materials have contributed to this turnaround. Recent portfolio adjustments and improving market sentiment also indicate the potential for continued growth in the future.
Baillie Gifford American
The Baillie Gifford American B Acc fund aims to outperform the S&P 500 Index (as stated in sterling) by at least 1.5% each year over five-year periods. It invests at least 90% in U.S. companies, from all sectors and sizes. The fund is actively managed and adopts a concentrated investment strategy, which means it holds a relatively small number of high-conviction stocks. Classified within the IA North American sector, the fund currently manages £2.788 billion in assets.
The Baillie Gifford American Fund was once highly regarded for its impressive growth, achieving a remarkable return of 72.79% over five years. However, this success was followed by a significant downturn, exposing the fund to greater risks due to its concentrated investments in U.S. tech stocks.
The 2021/22 market downturn hit the fund hard, especially as its tech-heavy portfolio made it more vulnerable to a shift in market sentiment from growth stocks to value stocks. Over three years, the fund posted a significant loss of -32.25%, placing it among the poorest performers in its sector. Global events, including geopolitical tensions and the ongoing impact of the COVID-19 pandemic, contributed to market volatility.
Since the start of 2023, the fund has made a notable recovery, delivering a growth rate of 30.52%, well above the sector average of 20.21%. This bounce-back has been supported by improved economic conditions, including more stable inflation and interest rates, which have boosted the performance of growth stocks.
The fund's long-term strategy and proactive portfolio adjustments by the management team have been instrumental in navigating previous volatility. The shift back towards growth stocks has attracted renewed interest from both individual and institutional investors. As a result, the fund now appears well-positioned for further growth, particularly as the U.S. tech sector stabilises.
Baillie Gifford Global Alpha Growth
The Baillie Gifford Global Alpha Growth B Acc is designed to achieve long-term capital growth by by actively investing in global companies across various sectors. Its objective is to outperform the MSCI ACWI Index by 2% per year over a rolling five years. The fund typically holds more than 90% of its assets in equities, with a strong focus on innovative companies that have the potential for significant growth.
The fund has underperformed and faced significant challenges in recent years due to market volatility and a shift away from high-growth tech stocks. These stocks represent a large part of its portfolio. Over the past five years, the fund delivered a return of 47.51%, lagging behind the sector average of 52.22%. Its three-year performance was even more concerning, with a -3.97% loss compared to the sector average of 13.62%.
However, after this challenging period, the fund, now valued at £2.28 billion, is showing a strong comeback. In late 2023 and into 2024, the fund achieved a 20.00% return, outpacing the sector average of 16.64%. This turnaround highlights the fund's ability to recover and positions it on a stronger path going forward.
Baillie Gifford Long Term Global Growth Investment
The Baillie Gifford Long Term Global Growth Investment B Acc fund was launched on 10th April 2017 and manages £1.92 billion of clients’ assets. The fund aims to outperform the MSCI ACWI Index (measured in Sterling) by at least 2.5% per annum over rolling 5 years, after costs. It invests at least 90% in shares of companies, typically with a market value over $4 billion. The fund is actively managed and focuses on a concentrated portfolio of 30 to 60 holdings across any country or sector.
The fund consistently ranks among the best in the IA Global universe. Over the past five years, it delivered an impressive 99.24% return, significantly exceeding the sector average of 52.22%. Its strategy revolves around high-growth, transformational companies, leading to stellar returns during periods of market strength.
The fund has encountered significant headwinds over the last three years, delivering a -16.80% return compared to the sector average of 13.62%. Similar to other Baillie Gifford funds, this poor performance stems from unfavourable market conditions, particularly the sell-off in high-growth technology stocks, and the inherent risks of a growth-focused strategy.
After short-term setbacks, the fund still sticks to its long-term strategy, targeting sectors like artificial intelligence and digital transformation. Over the past year, it bounced back with a solid 30.36% return, placing it in the top 25% of its peers in the sector.
Excluding 2022, it has been a standout performer in the Baillie Gifford fund range. For investors seeking long-term global equity exposure, the Baillie Gifford Long Term Global Growth fund is a compelling option. Its strong long term performance warrants its position among the best Baillie Gifford funds available.
Baillie Gifford Positive Change
The Baillie Gifford Positive Change B Acc fund aims to outperform the MSCI ACWI Index by 2% per year over rolling five years. It invests in 25-50 global high quality growth companies that tackle important social and environmental issues. These companies are selected for their ability to drive positive change in one of four key areas: social inclusion and education, environment and resource needs, healthcare and quality of life, and addressing the needs of the world's poorest populations.
The fund performed exceptionally in its early years, achieving a five-year annualised return of 85.48%, far exceeding the sector average of 52.22%. This success highlights its ability to thrive under favourable market conditions.
With £1.83 billion of clients' assets under management, this fund's strategy has led to underperformance and struggled in recent years. Over the past three years, it recorded a negative return of -4.26%, significantly below the sector average of 17.22%. In the past year, the fund returned 10.85%, also falling short of the sector average of 16.64%. The fund's concentrated portfolio and exposure to volatile growth stocks have amplified its losses, contributing to its 2-star rating.
Geopolitical tensions and rising interest rates have further impacted performance, raising concerns about its resilience in challenging markets. This fund may not be ideal for investors focused on short-term performance, looking for steady income, or planning to invest for less than five years.
Baillie Gifford Japanese
The Baillie Gifford Japanese B Acc fund is classified within the IA Japan sector where it aims to surpass the TOPIX Index by at least 1.5% annually over rolling 5-year periods. It primarily invests in Japanese companies of all sizes and sectors, focusing on long-term capital growth.
Despite managing £1.38 billion in assets, the Baillie Gifford Japanese B Acc fund has persistently underperformed within the IA Japan sector. Over the past year, it returned growth of 6.96%, while the sector average was 8.98%. The 3 & 5 year performances were also poor, with growth returns of -12.45% and 6.66%, respectively, which was well below the 3.04% and 25.09%, ranking among the worst in its sector.
A key factor in this underperformance is the fund’s concentrated portfolio, particularly its heavy exposure to sectors like communication services and financials. The fund is also impacted by fluctuations in the Japanese yen, which has seen volatility in recent years.
Baillie Gifford Diversified Growth
The Baillie Gifford Diversified Growth fund, launched in 2008, aims to deliver returns of at least 3.5% above the UK base rate over rolling 5 years. The fund takes a multi-asset approach, investing in a variety of asset classes such as equities, bonds, infrastructure, property, and commodities.
However, in recent years, this 2-star rated fund has struggled to meet its objectives. Over the past 3 years, it has delivered a return of -3.25%, and over five years, it returned 8.13%, both falling significantly short of the sector averages of 11.5% and 22.72%, respectively. These figures highlight the challenges the fund has faced, especially during periods of market volatility and macroeconomic pressures.
Managing £1.26 billion in assets, the Baillie Gifford Diversified Growth fund remains an important part of Baillie Gifford's portfolio, despite its previous struggles.
Over the past year, the fund has made significant strides, delivering a 14.32% return, outperforming the sector average of 8.18%. This recovery stems from its multi-asset strategy, which has benefited from stronger performances in sectors such as infrastructure and equities. Strategic adjustments, including reducing exposure to more volatile areas, have also contributed to the fund’s improved performance, allowing it to more effectively manage its assets.
Summary
Baillie Gifford’s funds have long been recognised for their strong growth performance, with the firm establishing itself as a leader in high-growth investing. However, this momentum shifted in late 2021 as global markets began to retract amid growing economic concerns.
During this period, Baillie Gifford’s growth-focused approach faced significant headwinds, resulting in more pronounced declines than many competitors. As markets struggled with unfavourable conditions for growth, Baillie Gifford funds - highly concentrated in high growth sectors - saw deeper valuation drops. Although the market reached its lowest point in late 2022, conditions remained stagnant until a positive growth period began around mid-2023, driving a more favourable environment for growth strategies.
While some Baillie Gifford funds have underperformed over the past three to five years due to these challenging conditions, their long-term track record affirms the strength of their high-growth strategy. As demonstrated in this report, most Baillie Gifford funds have historically outperformed their sector peers over longer periods, suggesting that their quality and growth potential persist through market cycles. Ultimately, the principle of remaining invested over time remains one of the most critical factors for achieving long-term investment success.
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