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Making Waves.

December 2021

Key points

The time has come to change the world, to help solve the pressing global challenges, everything from the climate emergency to social inclusion.

All investment strategies have the potential for profit and loss, your or your clients’ capital may be at risk. Past performance is not a guide to future returns.


Starting with the mindset that human ingenuity and innovation can both tackle these challenges and create investment opportunities, the Keystone Positive Change Investment Trust invests in the companies making a positive contribution to the world.

Baillie Gifford took over the management of the investment trust in February 2021, reshaping it as a global mandate, with sustainability at its core. The trust has two equally important objectives – to generate long-term capital and growth, and to contribute towards a more sustainable and inclusive world. Holding between 30 to 60 companies, the trust invests through the lens of four impact themes:

  • Social inclusion and education
  • Environment and resource needs
  • Healthcare and quality of life
  • Base of the pyramid (those at the bottom of the global income ladder)


Change enablers

The companies in the portfolio are those that the managers identify as enabling change across one or more of these themes. Moderna’s Covid-19 vaccine has made the company a household name, but other holdings may be less well known or the impact harder to see. Xylem’s mission is to solve water challenges, by providing water infrastructure and smart water systems. Last year, it helped its customers to re-use more than one trillion gallons (4.3 billion cubic metres) of water.

The Covid-19 pandemic has accelerated progress across all four impact areas. Innovations that might have taken years to establish have become an accepted part of the ‘new normal’. The Positive Change Team invested in the telemedicine and virtual healthcare company Teladoc pre-pandemic, expecting the transition to online medical services to be long term and gradual. During the pandemic, many patients and doctors became users of telemedicine by necessity, but the forced experiment has become a trend that is unlikely to reverse.

Wave makers

The focus of the trust is on finding the wave makers rather than the wave riders, always accelerating progress, but only ever on a scale that makes investment sense. The impact case for Dexcom is that its CGMs (continuous glucose monitors) enable diabetics to better manage their condition.

The investment case has real synergy with the impact case as over time we expect company growth to be driven by Dexcom increasing the number of patients using their monitors by expanding internationally, developing low cost monitors and helping people prevent the condition by monitoring their glucose levels if they are at high risk of diabetes.

With 'positive change' in its name, it is unsurprising that the trust’s managers are optimistic and take a positive approach to sustainable investment. The managers are trying to invest positively for the long term, which translates into bottom-up fundamental research on both investment and impact.

An area that excites the managers is the opportunity to invest in private companies, where the trust can invest up to 30 per cent of the portfolio. At present, the private companies held – Northvolt (electric vehicle battery manufacturer), Spiber (synthetic biology) and PsiQuantuam (quantum computing) – account for 2 per cent of the portfolio, but this figure is likely to increase over time. As well as it being a hotbed of innovation, in supplying primary capital to private companies, shareholders can be confident they are increasing their impact as a shareholder. Spiber, for example, applies engineering techniques to biology, creating biodegradable fibres that share the attractive qualities of natural fibres and serve as an alternative to fibres created from petrochemicals. Over the long term, its materials could have a meaningful impact in mitigating the harmful effects of areas such as fast fashion.

Engaging for impact

As of next year, the trust’s shareholders will receive an annual impact report. Impacts can be hard to establish – how do you measure the impact that an online education provider has in changing the employment prospects of its students? Hard-to-measure aspects such as these might be key to the impact case, which is why impact is tailored to each of the holdings and it is important that the reporting covers both short-term outcomes, such as in Ørsted’s case (offshore wind production), the quantity of CO2 emissions avoided over the course of the financial year, and long-term outcomes, which we cover by mapping back to the UN Sustainable Development Goals.

There is no such thing as a perfect company. Even Ørsted receives a small portion of its revenue from coal-fired power generation, therefore the direction of travel is important. Each year, the trust sets its engagement priorities for the year ahead, deciding what the key issues are to engage with on a company-by-company basis. We aim to engage with each company at least once every 18 months, but it is usually more, with scope to address issues that arise over the course of the year.

Investors should never underestimate the value of being supportive long-term shareholders that encourage companies to stick to their strategic vision, invest in research and development and keep the focus on the future. It’s a holistic investment approach that the Keystone Positive Change managers see as an investment in the future, both financially and in changing the world for the better.

Risk factors

The views expressed in this communication are those of the author and should not be considered as advice or a recommendation to buy, sell or hold a particular investment. They reflect personal opinion and should not be taken as statements of fact nor should any reliance be placed on them when making investment decisions.

This communication was produced and approved in December 2021 and has not been updated subsequently. It represents views held at the time of writing and may not reflect current thinking.

Stock examples

Any stock examples and images used in this communication are not intended to represent recommendations to buy or sell, neither is it implied that they will prove profitable in the future. It is not known whether they will feature in any future portfolio produced by us. Any individual examples will represent only a small part of the overall portfolio and are inserted purely to help illustrate our investment style.

This communication contains information on investments which does not constitute independent research. Accordingly, it is not subject to the protections afforded to independent research and Baillie Gifford and its staff may have dealt in the investments concerned.

All information is sourced from Baillie Gifford & Co and is current unless otherwise stated.

The images used in this communication are for illustrative purposes only.

Important information

Baillie Gifford & Co Limited is authorised and regulated by the Financial Conduct Authority. Baillie Gifford & Co Limited is the authorised Alternative Investment Fund Manager and Company Secretary of the Trust.

The Keystone Positive Change Investment Trust is a listed UK company, and is not authorised or regulated by the Financial Conduct Authority.

The value of its shares, and any income from them, can fall as well as rise and investors may not get back the amount invested. The specific risks associated with the fund include:

The Trust invests in overseas securities. 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.

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.

The Trust's risk could be increased by its investment in private companies. These assets may be more difficult to sell, so changes in their prices may be greater.

The Trust invests in companies whose products or behaviour make a positive impact on society and/or the environment. This means the Trust will not invest in certain sectors and companies and the universe of investments available to the Trust will be more limited than other funds and trusts that do not apply such criteria. The Trust therefore may have different returns than a fund or trust which has no such restrictions.

The information and opinions expressed within this communication are subject to change without notice. This information has been issued and approved by Baillie Gifford & Co Limited and does not in any way constitute investment advice.


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