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 view 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.

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
The Trust 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.

Over-The-Counter stocks
The Trust's risk could be increased by its investment in companies not traded on the main markets.  These contracts may be more difficult to buy or sell than those traded on a stock market, so changes in their prices may be greater.  They also carry a risk of the other party involved failing to meet their obligations under the contract. 

Investment in smaller companies
Investment in smaller companies is generally considered higher risk as changes in their share prices may be greater and the shares may be harder to sell.  Smaller companies may do less well in periods of unfavourable economic conditions.

Single country trust
Single country trusts are generally considered higher risk than those which invest in a number of different countries, as they are exposed to the changes in a single market and currency. 

Charges to income
Charges are deducted from income. Where income is low, the expenses may be greater than the total income received, meaning the trust may not pay a dividend and the capital value would be reduced. 

Income of secondary importance
The generation of income is less important than the aim of achieving capital growth and it is unlikely that the Trust will provide a steady, or indeed any, income.

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.