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As with any investment, your capital is at risk. Past performance is not a guide to future returns.   Ian Horne (IH): Hello and welcome to today’s broadcast with Baillie Gifford, in which we’ll be looking beyond the UK market rally and asking where next for growth? By way of an introduction, I’m Ian Horne, I’ll be representing Citywire today. You may recognise me as the chair of many Citywire events over the past decade. In this webinar, I’ll be in conversation with Milena Mileva, comanager of the Baillie Gifford UK Growth Trust. I’ll be asking Milena all about the future of UK growth and how she runs the trust for about 30 minutes. We’ll be looking at things like market concentration risk, the performance of British growth stocks and how to find the best of British and drive long-term returns. Once I’m done asking questions to Milena, the focus turns to you, the audience. We’ll be taking your questions which you can submit at any time via the Q&A box. So, let’s get started. Milena, it’s great to have you here. My first question is all about concentration in the market. UK market returns in 2025 of course, were driven by a small number of companies in narrow sectors. Can you talk us through the concentration and are there any risks that we should be aware of? Milena Mileva (MM): The first thing to note is that the UK market had a wonderful year, actually, last year it was one of the top-performing global equity markets, the all share rose 24 per cent. That’s the starting point. It’s been a great year, 2025 for UK investors. As you say, in that great return, underneath that is very significant concentration in terms of the companies that were driving this return. I think two-thirds of the market gains were basically just ten companies. Those were in a narrow set of sectors. Banking, defence, and pharmaceuticals. Clearly, the banking sector was especially striking with the likes of HSBC and Lloyds, NatWest, and Barclays all rising 60 per cent to 90 per cent last year. Incredible outcome. When you talk about what the potential risks of this concentration are, the UK market has always been a pretty concentrated benchmark. I guess the level of concentration is now at a relatively extreme end of things in an historical context. I think the answer to that depends on how investors access the market. If investors are passive investors, for example, it’s obvious now that future returns are being increasingly reliant on a pretty narrow set of companies. Many of those companies have obviously enjoyed some extremely favourable macro-economic tailwinds. The banks, one obvious example. Clearly in terms of their earnings and their capital return, they’ve benefitted a lot from the rapid and significant increase in interest rates. I guess for us, as long-term investors in quality growth companies, the natural question that comes from that would be to what extent is this share price performance reflecting a sustained and meaningful improvement in long-term fundamentals and to what extent it’s been driven by a specific cyclical backdrop, which may or may not be sustainable. Clearly, active portfolios can look across the whole investing universe and in the case of BGUK, look for companies that there’s genuine conviction in long-term sustained growth. I think that’s how I’ll answer the question about concerns around concentration. In some ways you look at the UK market and 40 per cent of the index is in ten companies. It basically has the profile of a high-conviction active portfolio.  It doesn’t have the process. I would argue, and the grounding you have and forward-looking insight and forward-looking judgement which an active portfolio that holds weights of this size normally would have. I think that’s what’s important for investors to think about going forward. IH: Is there a chance that concentration’s perhaps an overstated risk? The UK economy isn’t the only one that has concentration risk at present. MM: Concentration doesn’t necessarily have to be a risk. As you say, the point for me is that concentration needs to be grounded in a forward-looking judgement around sustainability of growth when it comes to investing. I just think in the index that’s just not there. IH: A reminder to people watching at home, if you have any questions around concentration risk, send them in, we’ll get round to those later. My next question is around inflection point analysis. The UK market has rallied strongly, as we’ve been discussing. How do you assess whether that momentum is sustainable? MM: The way I think about it is when you think about returns driven by fundamental growth and ultimately, the multiple that the market is willing to pay for that growth. The multiple the market’s willing to put on the earnings. I think the latter lever, as it were, the latter driver is less sustainable. It’s more finite. The former, I think, and especially the way we run the portfolio is the more important one for me. I guess just going back to the point round 2025 and the cohort of companies that led the rally in the UK, which is obviously impressive. A lot of that return over the past year has come from essentially a multiple rerating rather than growth. Some of these companies are now trading at the very top-end of their long-term valuation ranges. I think this would be a debate, is the future properly discounting a very sustained and meaningful improvement in their long-term outlook or not? IH: What factors would you need to see to change that opinion? Obviously, you are of the opinion that this growth is sustainable for a fair while yet. What would change your mind on that? MM: The way I think about it is you look at things like essentially growth, quality, and valuation and these are the things that need to be aligned as a very compelling setup for outperformance. In the case of our portfolio, for example, I’d look at the companies, what type of growth are they delivering and in terms of what they have delivered over the last five years or so. They’ve comfortably grown at double the benchmark rate. They’ve delivered very strong earnings growth. Importantly, obviously, the future matters more than the past. When you think about inflection points, you need to think is that growth sustainable or not? That needs to be grounded in analysis and why should these companies be able to continue delivering these types of growth? Quality is the other important factor I look at and think about because for growth to be valuable, it needs to be able to endure over significant periods of time and it needs to be high returning. Our portfolio is very well positioned in that sense because the returns on invested capital on aggregate level that our companies deliver are comfortably double that of the benchmark. Obviously, their financial outputs and you need to understand what’s driving them. Why are the returns so high? Importantly, why are they sustainable? That’s what we try to do day-in and day-out. As a current starting point, that quality aspect I think is very strong and is something I think about a lot when I think about the future and the returns potential of our portfolio. Then finally valuation. What’s the starting point from here? When I look at it, you can expect a portfolio like ours to trade at a premium to the benchmark given its characteristics. That premium has narrowed very materially. That’s how I would put it. You’ve got growth and quality and valuations all aligning together in a quite compelling fashion at the minute. That gives me confidence on the forward-looking piece. I can’t tell you what the inflection points might be, but as a fundamental setup for future outperformance, I think that’s the way I’ll think about it. IH: Let’s look at growth relative performance. Growth stocks have had a challenging period relative to value in recent years. Things seemed to flip around 2021 if I’m not mistaken. Can you explain what’s shifted in 2025 and whether you believe we’re seeing a change in how growth companies are being valued in the UK? MM: I think your framing there is useful because last year was a striking year in terms of the underperformance of growth. Growth has had a pretty challenging period ever since the COVID-19 pandemic essentially ended. To be fair, the macroenvironment we’ve been in has been quite extreme and volatile and it has created the conditions for what are historically seen as value sectors like banking, energy, defence. These companies have actually delivered some good earnings growth and for a period. It doesn’t happen that often, but for a period, value companies outgrew growth companies in terms of the earnings growth they were delivering. Clearly growth also suffered the derating with interest rates going up. It’s almost being hit from both ends. It’s relative earnings growth and then a derating, a valuation headwind. What has changed in 2025, and not just in 2025, but more strikingly in 2025, is that superior growth that high quality growth companies are delivering, has very much reasserted itself. What hasn’t happened is that valuations haven’t caught up with it. You’re now in a position when you have, in some cases, a very striking disconnect between more superior delivered growth and valuations that lagged and are not reflecting that yet. IH: Within a UK context, has it impacted us any differently to other markets? MM: I think it has been quite extreme in the UK. Both in historical terms and in some ways, in comparison to other markets. Yes, I’d argue that’s the case. IH: We looked at the valuation opportunity. You mentioned a valuation opportunity in UK growth stocks today. Which metrics are you using to assess that and how does current UK growth stock valuation compare to historical levels or even other markets? MM: I think you can use a range of forward-looking metrics. Good old price to earnings multiple is as good a starting point as any to think about these things. If I look at the BGUK portfolio, we would expect it to be at a premium to the benchmark, given the growth and the quality of the businesses we invest in. That premium is now is less than 20 per cent relative to five, ten years ago. Then it would have been nearly 50 per cent, 45 per cent. There’s clearly been a material valuation headwind in our portfolio. Not just our portfolio, but across a lot of other growth businesses in the UK. Many of which we watch and some of which we recently bought and we haven’t owned before, when we’ve taken advantage of that derating that’s affected them. IH: What’s caused that to happen exactly? MM: I think initially obviously with interest rates going up, that’s a headwind to long-duration growth assets naturally. There was a period in 2022, 2023 you could argue, some disappointing delivery of earnings. As you know there was a lot of disruption in the global economy on the back of the COVID pandemic and supply chains and a lot of businesses suffered some headwinds as a result of that. I think initially, a combination of both derating and relatively weaker earnings delivery. More recently I think it’s just been worries around-, it depends. There’s been worries around the economic outlook in the UK. The economic outlook globally. What’s been going on with tariffs. There’re different reasons that growth assets have been derated. The market as a whole has emphasised short-term certainty over the long-term growth. That’s what’s really led to the headwinds. IH: I’m intrigued that you mentioned the headlines. I think if you were an outsider to the UK and you got your view on the economy purely from reading the news, you would assume that everything was in fairly bad state. In fact, as you were saying, earnings are quite strong. Do you pay any attention to headlines and economic projections or are you more focused on earnings? MM: I think you pay attention to these things. The question is just how much weight you put on them. We own a few businesses that are domestic. Generate all their revenues from the UK and deliver growth. I would argue they’re not dependent on the growth of the UK economy and what GDP was last year, what GDP would be next year or in two years’ time. The growth is to do with more structural factors and business models and whatnot. Yet the markets valuing them as a proxy to the UK economy. I’ve got a tonne of examples I can speak to. Something like Moonpig, for example. Moonpig is an online greetings card retailer and it has fantastic business economics. This company’s is very compelling, very cash generative, very capital light. It’s growing very nicely. It’s certainly outgrowing the UK economy. It is priced as a proxy to the UK economy, which I think is a mistake. I think there’s real structural growth in this company. A lot of it comes from investments in technology and data science, for example, which drive improvements in the customer proposition and that drives growth and engagement in customer behaviour and monetisation. I don’t see that it’s always a proxy for the UK economy and yet the market’s valuing it. I think for a patient long-term investor, I think that creates a very compelling mispricing opportunity and is one that we’ve taken advantage over the last couple of years since we’ve owned in the BGUK portfolio. IH: It is also somewhat of an opportunity that there’s some negativity around the UK, but actually, many of these growth stocks are multinationals.  MM: That’s also true and there’s loads of companies we own in our portfolio, where the majority of the earnings are coming from overseas markets. The engineering companies. Things like Games Workshop. Loads of companies we own are very, very internationally exposed businesses. As I say, I think even for the domestic ones, I don’t see them as proxies to the economy. I don’t see their earnings growth is correlated to the UK GDP output and whatnot. IH: That’s a really interesting distinction, thank you. Let’s go on to how you find the best of British. That’s one thing we promised people on the invite we’d go into. What criteria defines best of British for you? I’ve got several follow-up questions, but let’s start with that. MM: I think I’ll keep it fairly general here. I won’t go into the nitty-gritty of the actual process and how we go about doing it. I think what we look for-, the first thing is it goes back to this idea of growth is only valuable if it’s durable and if it’s high returning. The one thing that we put a lot of emphasis on is companies that have a strong and enduring competitive advantage. I think that’s one of the key things we look for in businesses. There needs to be a good hypothesis as to why this business is able to generate excess returns over its capital for many, many years and for that competitive advantage to in fact, become stronger over time. That’s one thing we look at when we try and think about best of British growth franchises. The other thing we unashamedly put a lot of weight on in our process is management and culture in capital allocation. We want to invest it alongside management teams who show consistently that they prioritise long-term value creation over short-term profits. I think that’s especially powerful because when companies are willing to invest in challenging times, in downturns, for us it’s usually a great sign and something we’re willing to back. It puts other people off quite often, because it’s uncomfortable to continue investing through challenging periods, but it’s something we look for because that’s usually a sign for leadership teams that are prioritising long-term value creation. IH: I think you may have answered this question already, but is there anything else that you look for that you think other people are missing? MM: I think it’s that long-term arbitrage. It’s that time arbitrage. We are very long-term patient investors. For it to work, you need to have those ingredients of a very strong business with very strong unit economics. Then importantly, a leadership team that understands how to protect that business over a long-long periods of time. That requires making those decisions on a consistent basis, not just talking about them ion annual reports or to investors, but actually demonstrating it through cycles that you are willing to prioritise long-term value creation. To me, these are the key things I look for. IH: What is your process for identifying companies that meet your criteria? MM: We’re very open-minded. We literally look across the whole market. We’re generalist investors. We would invest in companies with very different growth profiles and companies coming from many different sectors and industries. That’s what we’re looking for is these two things I mentioned. A plausible hypothesis as to why this company has a durable defensive or competitive advantage and what is it about the management and the culture of this company that’s going to feed into that competitive advantage over a long-term time horizon. We invest with a five, ten-year view. These are the things that matter the most. IH: Let’s go back into the detail of specific stocks. I enjoyed the walkthrough on Moonpig, I thought that was particularly interesting, but what I’d like to drill into is Games Workshop, which is the largest holding in our portfolio at 7.7 per cent of the portfolio. I’d like to know what gives you such high conviction in it? The world’s talking about IA and tech and Games Workshop stands out as being just a little bit different. Talk us through that one. MM: It’s certainly not in the topic du jour of AI, I guess. Quite frankly, it basically hits a lot of the boxes I mentioned before. It’s an incredibly durable and high-quality franchise and is one where stewardship of the company is important because it’s a company that’s been run in a very long-term manner. The leadership team has shown consistently, that they prioritise long-term value creation. They’ve resisted a temptation to over commercialise. It’s a company that is the creator of Warhammer, which is a fantasy universe and makes a tabletop game. It’s increasingly involved in licensing its intellectual property. There’s always a risk that it’s done in a way that is not consistent with the long-term health of the brand. One of the things I like about this company and the way it’s run is that it has prioritised that long-term health of the brand.  It has resisted the temptation to over commercialise and dilute that brand. This company has a very passionate community of customers and they spend a lot of time and a lot of money on their hobby. It’s very important that they believe in that brand and they’re engaged with it. That stewardship element matters a lot here for Games Workshop and I think the discipline is one of the competitive advantages and one of the things I like about it. As I say, it’s a very durable franchise. Very high-quality franchise. It has a genuinely global opportunity. It’s obviously a fairly niche pursuit but people in the world would engage with it. Increasingly, it’s starting to live outside of that tabletop gaming in other areas of media and entertainment. It's something more powerful than just a product on a shelf. People can interact with it in so many different ways and I think that’s quite compelling and quite valuable. IH: It's a truly global brand, as you say, and it’s become multimedia as well, rather than just tabletop games. It’s a fascinating one to watch. Are there any other major portfolio stocks that you would point out and give us a bit more of a deep dive on? MM: Loads of them. There’re certain ones where I just think there’s a clear disconnect between fundamentals and valuations. There’s always a reason why valuations derate, as we were discussing earlier. At this juncture I’d flag things like Autotrader, Softcat, 4imprint and Moonpig, I spoke about. These are companies where I find it very hard to reconcile what’s a very strong fundamental outlook. Business quality with valuations that are multidecade lows in some cases. You’re talking about these companies trading at a below average market multiple, which just doesn’t make sense given the business quality and the growth, which we can see being delivered over the next five and ten years. The maths for us just doesn’t quite stack up. It's companies like this where I think growth is very on sale. I do think at the minute in the UK there’s some outstanding franchises which are on sale. I think something that investors should be thinking about. IH: For those watching at home. We got two more questions coming up. We are taking audience Q&A so, please put your questions through the Q&A. Do send them in earlier, I will prioritise ones that come in first. Next question is about portfolio positioning. The UK index is relatively underweight in tech. We say that. I guess we’re comparing it to the US, certain parts of Asia. Tech of course, is a major driver of growth in some nations. In which sectors do the UK hold competitive advantages? MM: You say it’s underweight, yes. There are companies you can find in tech more broadly, which are quite underappreciated. I point here to companies like Softcat and Kainos. Kainos is a software consultancy and does digital transformation projects. Primarily for the public sector. It’s essentially replacing outdated IT systems with modern digital ones. Softcat is another example of helping SMEs in the UK deciding on their IT infrastructure. These are companies which directly play into technology investment, which I think is a trend that’s a genuine growth tailwind over many years. Also, the framing needs to be slightly broader. I mentioned Moonpig, right. Moonpig is a consumer company, but it’s one where the business model is very much driven by technology. Technology is what drives this company’s future growth. More in touch with the customer proposition and it makes a lot of investments in that area. Autotrader, it connects automotive dealers and buyers of used cars in the UK, but it’s again, a company whose business model is driven by technology and how it improves the proposition for both sides of its marketplace. Things like TransferWise. Wise, the cross-border currency app. Another consumer product and, also business product. Again, the whole business model is driven by technology investment. The framing needs to be a bit broader and if you think about it in that way, we have so much exposure in the portfolio in businesses of that kind. IH: I think you make a good point about the blending of certain sectors and so on. To slightly ignore you a bit there, are you finding compelling growth in any places that are typically overlooked? MM: We’ve got longstanding investments in things like Howden Joinery and things like 4imprint I mentioned earlier. Which are nothing to do with technology. I think you can find growth anywhere you look in all sorts of different sectors. I think you just need to be agnostic and open-minded about it. The most important thing is you need to do the deep research work that helps you uncover something that other people are overlooking. IH: Obviously, when you’re working across a real range of sectors, like you say. Howdens is very different to Game Workshop is very different to other companies that you’ve mentioned. How do you ensure that you’ve got enough knowledge of each different sector to really understand the growth opportunity that’s there? MM: I think you work really hard. Without being a specialist, I think you try to get a robust understanding of the various sectors you look at. I think there’s actually a genuine benefit to being a generalist. Sometimes it’s wood for trees situation. You’re able to draw parallels and useful mental models between companies that are in many different sectors, that help you make quite inciteful investments. I think there is a genuine benefit to being a generalist. You’ve got to be a rigorous generalist. You need to be grounded in specific analysis and dynamics of an industry, but also, be able to have a more lateral perspective on things.  IH: I’d like to get your three-year view. If we move on three years from now, what does success look like for the UK Growth Trust? MM: It’s simply this point around the fundamental growth continues to be strong and for it to be basically reflected in share prices. I think that would be the clear path of success. Is a portfolio that’s strong, resilient, and growing well above the benchmark. Where valuations increasingly reflect that reality. That quite simply is the recipe for success. IH: Obviously, none of this happens in a vacuum. What needs to happen in the UK market for your investment approach to deliver optimal returns? MM: I think over time, to our earlier discussion, I hope that the businesses we’re invested in have the ability to grow not just in positive economic environments so I’m not reliant on miracles to happen in the UK economy for success or indeed, the global economy. A general relatively benign economic backdrop is great. Obviously, a big recession is not good for anybody. Out of that I think it’s a question of the companies just delivering and executing on what are pretty substantial opportunities. IH: I have one question to get us started and totally expected, the question is about AI. “What’s your take on the impact of AI on businesses in the portfolio after recent news reports? MM: A few of our companies have been caught up in this recent drama. I think the extremes are unhelpful. Clearly, it’s a pretty transformational technology and will have over time, profound impacts. Definitely, you can’t just be complacent and bury your head in the sand about it. Equally, the other extreme of oh my god, it’s the death of this company and it’ll be completely disrupted and cease to exist or be a lot less profitable. That extreme is also not helpful. I think as fundamental investors what we try to do is calibrate probabilities. Our share price is always the aggregate of many different possible futures and it’s our job to make considered judgements about what we think is likely to happen. I think the extremes are always unhelpful.  There always will be impacts, both good and bad and we should ground them in analysis and understanding of individual companies to make good judgements on it. It's a general answer, but each company is always looked at on its own merit. I think the market can be quite extreme in both directions in the short-term and that’s probably not where you want to be. IH: I totally take that point. I think everyone’s doing the same thing, trying to figure out what’s going on and no one really has the answers. If you look at something like software as a service, those business models appear to be under greater risk than most. Does that concern you? Obviously, you’re looking for fundamentals, but what if those are at risk of drying up quite soon? MM: The point I’d make there is not all software as a service will be the same. It just goes back to-, no doubt there will be some that will struggle more than others. No doubt everyone will be affected. It’s just about working out to what extent some of the risks are discounted in current valuations. IH: “What do you think is the biggest misconception about UK growth today?”  MM: That’s an interesting question. I think it’s when the world is quite uncertain and as we were discussing earlier on. The macro’s just been so volatile and extreme over recent years. I think it’s very easy for people to be fearful. I think the misconception goes to this point around there are companies where there’s something genuinely structural in their business model and what their advantage is. That thing will persist and contribute to their earnings growing. That’s the bit where people sometimes just miss the point. It’s so easy to get distracted by the noise and the uncertainties and to forget, quietly in the background, some of these companies will just continue compounding value for shareholders because there is something enduring about them. As I say I think currently, there’s not much in the share prices for that. That’s why I think it’s a very exciting time to be looking at growth companies in the UK, of which there a fair few. IH: I’d like to know what keeps you up at night about the UK market right now? Are there any things in particular that concern you? Obviously, you’re saying certain risks are overplayed and certain things you’re not too concerned about, like the headlines. Is there anything that you look at and do genuinely monitor quite closely and think about? MM: The world changes. People worry about risk. The way we think about risk is the risk of missing growth opportunities is failing to recognise companies that are going to be the growth companies of the future. It’s the missed opportunity risk that I worry probably more about. Are there areas of growth which I’m not thinking about as much as I should be? The risk of missing out on growth is probably what keeps me up at night more than anything else. IH: Are there any particular stocks where you did have that conversation? Where there was maybe an element of doubt, but you went for it and how has that played out if you’ve done that? MM: An element of doubt about something being growthy. IH: Yes, exactly. MM: There will be things where the conviction might not necessarily be there in the beginning or at least not be nearly as strong as it becomes over time. Things like Moonpig, I mentioned earlier, is something that it took me a while to actually build conviction in the growth outlook of this company and how big the opportunity might be. That applies to quite a few different companies, I guess. IH: “How have growth stocks performed in the UK compared to other markets recently?” MM: You can look at this data in many different ways and you can mine data in many different ways. Sometimes it’s an unhelpful thing. I think that quality growth has probably been more badly hit in the UK than it has been in other markets.  IH: Can we look at gearing? Gearing in the fund, if I’m not mistaken, is currently at 9 per cent. Do you think now is a good time to deploy more borrowed capital or do you think otherwise? MM: We’ve got quite an active buyback programme in the trust. That’s something we think about as well. We tend not to make big calls on the market. We’ve been reinvesting in individual companies where we think there’s just a very compelling disconnect and we just can’t reconcile the fundamentals and valuations. We’ve been quite busy doing that. As I say, we obviously have quite a meaningful and active buyback programme as well. IH: Looking at the portfolio, we dove into a few of the different stocks, some of the more prominent ones. I’m wondering if there’s one in particular that you have a sentiment for, having invested in it and it’s performed well. Is there one where you can particularly pinpoint? A difficult decision was made. It’s done well and you’re particularly happy that it ended up in the portfolio. MM: There’s been a few which have tested my patience over recent years. I think the one that’s been recently doing well and developing well is a company called Genus, which is an animal genetics company and that company suffered a lot just coming out of COVID because of something called the African Swine Fever, which was a virus that affected pork markets, particularly in China. Which is an important market for the company. It had quite a tricky period in terms of its profit progression. Given that it was starting on quite high valuations, it’s been a pretty disappointing investment and one that’s tested patience. It does have quite a strong structural growth opportunity in one of the areas which is quite promising and has been developing well. Is in the area of gene editing for a different virus that affects the global porcine cohort. Where they are, they’ve created quite a breakthrough innovation which was given approval by the FDA last year. That’s quite an important milestone. Hopefully it will be something that will drive real commercial success for this business over the next five and ten years. It’s really quite a transformational innovation. We’re not there yet in terms of monetising it, but we’ve reached some proper milestones and that’s been helping the share price, but it is a company where there was a big downcycle and big absorption shock, which affected its progression for a number of years and it was quite a disappointing investment. We stuck with it through this pretty challenging period and added to it, in fact a few times. It’s pleasing to see that it’s starting to deliver on its promise. IH: Obviously, you try and price in risk as best as you can, but you can’t be expected to predict a swine flu or something like that, which is going to impact the performance of a stock like that. What I’d be really interested in is during those moments where you’re having that conversation of whether to hold or sell, cut your losses. How do you and the team discuss that? Obviously, that’s going to be a team decision. How do you come to a decision on stocks like that ultimately? MM: There’s always active debate both between ourselves and with the companies, to try to ascertain what’s really driving the disappointing performance. The extent to which the drivers are temporary and as you say, no company lives in a vacuum. Unexpected stuff happens. It can be anything, but to what extent is the weakening performance being driven by something that’s actually more structural in nature? Is something that that’s changing the long-term opportunity or the competitive position of this company that’s weakening the prospects on a five-year view? That sometimes can be quite a tricky question to disentangle when there’s cycle factors. I think it’s always important to try to separate the two. Sometimes both things can be at play and it’s quite hard to work these things out. We look to what extent is the weakening performance a result of something that’s more structural and durable in nature and to what extent is this a more temporary phenomenon? IH: Are there any areas for potential growth that you’re looking at, that perhaps, you’re not invested in right now, but you’re very much closely monitoring in terms of the future? That could be particular stocks or it could be a sector more generally. MM: We’re not at all thematic in the way we think about these things. The selloff we discussed around AI is an interesting thing to consider and are there companies there that we’ve looked at in the past and perhaps, not invested that might be providing an opportunity because of that quite indiscriminate selloff we’ve seen the last three weeks or so? That’s one example. Another is we talked about the doom and gloom around the UK domestic economy. Are there some actually quite good franchises out there, where the outlook of the UK economy is really weighing on their valuations, but actually there’s a really high-quality business there that it’s worth significantly more than the current valuation? Whenever there’s uncertainty and other people put off, this can provide an opportunity if it’s a genuinely good business that you can invest in. IH: Any final words on UK growth and the fund? MM: As I said before, I think we’ve got a pretty compelling setup of a portfolio where the growth and the quality have improved over recent years and valuations have not kept up at all. I think without being specific about when it’s going to happen, I think it’s a pretty compelling setup for medium-term outperformance. IH: Thank you so much. Unfortunately, that is all we’ve got time for. Milena, thank you again for your time and insights. Likewise, thank you to everyone who’s tuned in. A special thanks to those of you who pitched in with some questions. We have more sessions like this coming up. Do keep an eye out for those if you found today useful. Until then, thank you once more and goodbye for now.   Baillie Gifford UK Growth Trust plc Annual past performance to 31 December each year   <table border="1" cellspacing="0" cellpadding="0" width="586"> <tbody> <tr> <td width="272" valign="top">   </td> <td width="64" valign="top"> 2021 </td> <td width="64" valign="top"> 2022 </td> <td width="64" valign="top"> 2023 </td> <td width="64" valign="top"> 2024 </td> <td width="58" valign="top"> 2025 </td> </tr> <tr> <td width="272" valign="top"> Share Price (%) </td> <td width="64" valign="top"> 8.2 </td> <td width="64" valign="top"> -29.9 </td> <td width="64" valign="top"> 2.3 </td> <td width="64" valign="top"> 11.1 </td> <td width="58" valign="top"> 17.5 </td> </tr> <tr> <td width="272" valign="top"> NAV (%) </td> <td width="64" valign="top"> 12.1 </td> <td width="64" valign="top"> -22.0 </td> <td width="64" valign="top"> 4.2 </td> <td width="64" valign="top"> 11.2 </td> <td width="58" valign="top"> 12.7 </td> </tr> <tr> <td width="272" valign="top"> FTSE All-Share Index </td> <td width="64" valign="top"> 18.3 </td> <td width="64" valign="top"> 0.3 </td> <td width="64" valign="top"> 7.9 </td> <td width="64" valign="top"> 9.5 </td> <td width="58" valign="top"> 24.0 </td> </tr> </tbody> </table>   Source: Morningstar, FTSE. Share price, total return in sterling. Returns reflect the annual charges but exclude any initial charge paid. The index data referenced herein is the property of one or more third party index provider(s) and is used under license. Such index providers accept no liability in connection with this document. For full details, see <a href="https://protect-eu.mimecast.com/s/W6HvCYyY2sDXKY0uGLZsS">www.bailliegifford.com/legal</a>   Past performance is not a guide to future returns.   Important information and risk factors This communication was produced and approved in February 2026 and has not been updated subsequently. It represents views held at the time of writing and may not reflect current thinking. This communication does not constitute, and is not subject to the protections afforded to, independent research. Baillie Gifford and its staff may have dealt in the investments concerned. The views expressed are not statements of fact and should not be considered as advice or a recommendation to buy, sell or hold a particular investment. The investment trusts managed by Baillie Gifford & Co Limited are listed UK companies and are not authorised or regulated by the Financial Conduct Authority. The value of their shares, and any income from them, can fall as well as rise and investors may not get back the amount invested. Baillie Gifford & Co and Baillie Gifford & Co Limited are authorised and regulated by the Financial Conduct Authority (FCA). The investment trusts managed by Baillie Gifford & Co Limited are listed on the London Stock Exchange and are not authorised or regulated by the FCA. A Key Information Document is available at bailliegifford.com. Baillie Gifford & Co and Baillie Gifford & Co Limited are authorised and regulated by the Financial Conduct Authority (FCA). The specific risks associated with the trust include: • Unlisted investments such as private companies can increase risk. These assets may be more difficult to sell, so changes in their prices may be greater. • The Trust can borrow money to make further investments (sometimes known as "gearing" or "leverage"). 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 invested borrowings will increase the amount of this loss. • 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. • The Trust's risk is increased as it holds fewer investments than a typical investment trust and the effect of this, together with its long-term approach to investment, could result in large movements in the share price. • The Trust can make use of derivatives which may impact on its performance. • The Trust's exposure to a single market may increase risk. • Share prices may either be below (at a discount) or above (at a premium) the net asset value (NAV). The Company may issue new shares when the price is at a premium which may reduce the share price. Shares bought at a premium may have a greater risk of loss than those bought at a discount. • The Trust can buy back its own shares. The risks from borrowing, referred to above, are increased when a trust buys back its own shares. • The aim of the Trust is to achieve capital growth. You should not expect a significant, or steady, annual income from the Trust.   Further details of the risks associated with investing in the Trust, including a Key Information Document and how charges are applied, can be found in the Trust specific pages at www.bailliegifford.com, or by calling Baillie Gifford on 0800 917 2113.   187722 10060655

UK Growth Trust: beyond the UK market rally: where next for growth?

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About the speaker

About the speaker

Milena Mileva

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