Baillie Gifford Managed: our 7 most exciting growth picks

As with any investment, your capital is at risk.

Across the Managed portfolio, we seek to find the world’s most compelling growth stories, wherever they emerge. From AI-powered logistics in the US to sovereign bonds in the Pacific, we look for the innovators of tomorrow with strong balance sheets today.

This quarter we spotlight seven picks with the potential for future growth, reflecting our regional equity and fixed income expertise. Here’s what we’re excited about and why.

1. Amazon (US)

Amazon, like the warriors it shares its name with, is a conqueror. It dominates online retail in the US and cloud services globally. These two businesses are the core of our investment case, and progress is good. Amazon delivers more parcels than anyone else in the US and has the world’s largest fleet of industrial robots to sort packages faster and reduce injuries. It is spending heavily to ensure its artificial intelligence (AI) offering becomes critical enterprise infrastructure. The business has grown its sales by 20 per cent or more for 17 of the past 20 years and invests much more efficiently than peers.

2. TSMC (emerging markets)

Unlike Amazon, TSMC isn’t a household name. However, avoiding the headlines is part of TSMC’s appeal. The Managed Fund has owned the Taiwanese semiconductor manufacturing company for eight years, and clients have doubled their money every four years. It commands two-thirds of a growing market and has no sizeable competition. We believe in TSMC’s growth because it is indispensable to its customers. Without TSMC, there would be no AI and no iPhones. It is combating cyclicality and geopolitical risk by diversifying its products and moving manufacturing outside Taiwan.

3. Babcock International (UK)

Every nuclear submarine in the Royal Navy visits Babcock’s Devonport dockyard for refuelling and refitting. This site is at the centre of Babcock’s comeback story. A government-funded upgrade will widen the range of work the yard can accept, double the number of submarines it can service, and guarantee a steady flow of jobs for years ahead. Meanwhile, management is addressing historical challenges and strengthening Babcock’s position as a valued partner in the UK and European defence markets. Babcock’s lack of exposure to the US, once considered a weakness, has become a strategic edge given the current geopolitical climate.

4. DSV (Europe)

Our Europe fund manager, Chris Davies, talks about two types of acquirer: the nibblers and the gobblers. DSV is a gobbler. By taking over a large competitor every five or so years, the Danish company has become one of the biggest transport and logistics firms on Earth. Mergers and acquisitions are risky and can destroy value, but DSV has made a success of them. It has grown on average by 13 per cent per year for the past decade. Donald Trump’s tariffs have affected DSV’s share price in the near term, but DSV makes money by helping clients move goods easily. With a trickier trade situation, clients need DSV even more.

5. United Overseas Bank (developed Asia)

Although family-run since 1935, United Overseas Bank (UOB) is no ‘mom-and-pop’ shop. It has a reputation for innovation. In the 1980s, UOB introduced a credit card to capture women’s rising wealth. It has now launched Southeast Asia’s first mobile-only banking app for Gen Z and millennials. UOB’s family culture allows it to make decisions across generations, putting long-term growth ahead of short-term profits. The bank has a sticky customer base, a well-diversified deposit and loan portfolio, and a well-capitalised balance sheet. UOB stands to gain from closer ties between China and Southeast Asia.

6. International Workspace Group bonds (corporate credit)

With British workers now spending an average of two days a week away from the office, this UK-listed business provides employers with flexible office spaces to meet the needs of hybrid working. It is an asset-light, well-run business. We bought its investment grade bonds in 2024 when they came to market with a 6.5 per cent coupon. This offered an attractive yield and low credit risk compared to bonds issued by companies with similar characteristics. A misplaced association with the delinquent WeWork has weighed on sentiment, but the business is well-positioned to grow, improving its financial position and, therefore, its bond price.

7. Long-dated Australian government bonds (global bonds)

Investors buy developed market government debt for security and dependability, but Australian sovereign bonds are more than just a port in the storm. The 30-year Australian bonds hedged into GBP offer a yield of almost 6 per cent. They also provide good defensive properties, supported by Australia’s relatively small fiscal deficit. Inflation is close to target, allowing the Reserve Bank of Australia to cut interest rates, which has raised the bond price. Speculation over US tariffs and debt levels is driving volatility, but its low debt levels, AAA credit rating, and trade deficit with the US make Australia relatively immune.

Our approach strives to unearth growth in all its forms, from submarines in Plymouth to banking apps in Singapore. We aim to go where the reward is greatest, not where the index tells us to.

Annual past performance to 31 March each year (%)

The Fund has no target. However you may wish to assess the performance of both income and capital against inflation (UK CPI) over a five-year period. In addition, the manager believes an appropriate performance comparison for this Fund is the Investment Association Mixed Investment 40-85% Shares Sector.

Source: FE, Revolution. Net of fees, total return in sterling.

Past performance is not a guide to future returns.

Important information and risk factors

This article was produced in June 2025 and has not been updated subsequently. It represents views held at the time and may not reflect current thinking.

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

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.

Baillie Gifford & Co and Baillie Gifford & Co Limited are authorised and regulated by the Financial Conduct Authority (FCA). Baillie Gifford & Co Limited is an Authorised Corporate Director of OEICs.

Investment markets can go down as well as up and market conditions can change rapidly. The value of an investment in the Fund, and any income from it, can fall as well as rise and investors may not get back the amount invested.

The Fund’s share price can be volatile due to movements in the prices of the underlying holdings and the basis on which the Fund is priced.

Further details of the risks associated with investing in the Fund can be found in the Key Investor Information Document or the Prospectus, copies of which are available at bailliegifford.com.