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 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.

Borrowing (Gearing)
All the trusts 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.

Buy-back shares 
Trusts can buy back and cancel their own shares. The risks from borrowing, referred to above, are increased when a 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 could be a high risk of loss to the trust due to 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.

Property investment
The Trust has some direct property investments, which may be difficult to sell.  Valuations of property are only estimates based on the valuer's opinion rather than fact.  These estimates may not be be achieved when the property is sold.

Charges to capital
The Trust charges 65% of its investment management, borrowing costs and property management to capital, which reduces the capital value. Also, where income is low, expenses charged to income may be greater than the total income received, meaning 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.