Risk factors

Any investment in an investment trust involves risk. You should be aware of the following risks when considering investing

Past performance
Past performance is not a guide to future performance.

The value of your investment
The The Investment Trusts managed by Baillie Gifford & Co are listed on the stock market.  As a result, the value of the shares in them, and any income from those shares, is not guaranteed and could go down as well as up. You may not get back the amount you invested.  You should regard your investment as long-term.

Overseas investment
The Trust invests in overseas securities and changes in the rates of exchange may also cause the value of your investment (and any income it may pay) to go down or up.

Emerging Markets 
The Trust invests in emerging markets where difficulties in dealing, settlement and custody could arise, resulting in a negative impact on the value of your investment. Investing in emerging markets may cause greater fluctuations in the value of the Trust compared to investing in established markets. 

Gearing
The Trust can borrow money to make further investments (sometimes known as 'gearing'). The risk is that when this money is repaid by the Trust, the value of the investments may not be enough to cover the borrowing and interest costs, and the Trust will make a loss. If the Trust's investments fall in value, any borrowings will increase the amount of this loss.

Share buy-backs
The Trust can buy back and cancel its own shares. The risks from borrowing, referred to above, are increased when the Trust buys back and cancels its shares.

Liquidity
Market values for securities which have become difficult to trade may not be readily available, and there can be no assurance that any value assigned to such securities will accurately reflect the price the Trust might receive upon their sale.

Derivatives 
Investment trusts can make use of derivatives. Derivatives are most often used to compensate for possible unfavourable currency and market movements. As a result, there is a risk that potential gains may be restricted in a rising market. If derivatives were ever used for speculative purposes, there would be a high risk of loss to the Trust because of the large and quick price movements of these contracts. They also carry a risk of the other party involved failing to meet their obligations under the contract.

Corporate Bonds
Investment in corporate bonds exposes you to the risk of non-payment on the part of the issuer and bond prices are sensitive to changes in interest rates. They are generally perceived to result in a greater possibility of capital loss than investment in, for example, higher rated UK government bonds. Under certain market conditions, such as those existing at present, corporate bonds can be more difficult to buy or sell and changes in their prices may be greater than those of government bonds.

Insurance Bonds
The Trust invests in insurance-linked bonds (also referred to as catastrophe bonds) that are exposed to the risk of extreme insurance losses from natural disasters such as earthquakes or hurricanes. In the event of a number of specified disasters occurring during the life of a bond the Trust will suffer a capital loss.

Charges to capital
The Trust charges 50% of the investment management and borrowing costs to capital which reduces the capital value. Also, where income is low, the remaining expenses may be greater than the total income received and the Trust may not pay a dividend and the capital value would be further reduced.

Tax Rates
You should note that tax rates and reliefs may change at any time and their value depends on your circumstances.

Regulation
The Trust is a UK public listed company and is not authorised or regulated by the Financial Services Authority.

Information subject to change
The information and opinions expressed on this website are subject to change without notice.