Strategies

Long-term investments in well-managed growth businesses - sustainable, competitive advantages

This long-term global equity growth strategy employs bottom-up stock selection, invests in around 100 stocks, and differs significantly from the stock market index. The portfolio is diversified across stocks, industries and regions, with broad holding sizes of 0.5%, 1% or 2%, depending on the team’s level of conviction in the company’s prospects.

Typical Number of Holdings: 70-120
Maximum Stock Position: 6%
Benchmark: MSCI All Country World Index 
Objective: +2-3% p.a. over benchmark over rolling five year periods

A broader, diversified approach to global equity investing.

As a combination of five autonomously-run portfolios seeking to benefit from the specialist knowledge of Baillie Gifford’s regional teams, Global Core takes an idiosyncratic approach to investing and reduces concentrations of risk in particular themes. It offers the flexibility for clients to exclude exposure to a particular region.

Typical Number of Holdings: 100-150
Maximum Stock Position: 4%
Benchmark: MSCI World or FTSE equivalent
Objective: +1-2% p.a. over rolling three year periods

The best growth opportunities are often in early-stage businesses

Global Discovery aims to capture these opportunities to produce superior long-term returns from a small subset of the estimated 15,000 smaller companies with sufficient size and liquidity for us to invest. We focus on businesses likely to benefit from change in the company’s market backdrop and how the company responds through innovation, technology, or a new business model, to potentially return a multiple of our initial investment.

Typical Number of Holdings: 75-150
Benchmark: Unconstrained but MSCI All Country World/FTSE/S&P Global Small Cap indices used for long term comparison
Objective: +3% p.a. over rolling five year periods vs benchmark

The focus is on the long term, rather than short-term yield

Generating a sustainable and potentially rising real income requires more than simply holding high-dividend paying stocks. We combine stocks with higher yield than the market with an element of growth that we believe will secure the income of tomorrow.

Typical Number of Holdings: 50-80
Maximum Stock Position: Capital 6%, Income 5%
Benchmark: FTSE All World Index
Objective: +1-2% p.a. over benchmark over rolling five year periods

Global Stewardship invests in sustainable growth companies.

The Global Stewardship strategy mitigates Environmental, Social and Governance (ESG) risks by applying 'sin sector' exclusions, and then seeks to identify ESG opportunities by focusing on companies which our research suggests are a net benefit to society, which balance the interests of all stakeholders, and which exhibit a responsible culture. The Global Stewardship team is made up of experienced investors and senior ESG specialists, who provide challenge, context and comparison when building a concentrated portfolio of 70-100 stocks.

Typical Number of Holdings: 70-100
Maximum Stock Position: 6%
Benchmark: MSCI AC World Index
Objective: +2-3% p.a. over rolling five year periods vs benchmark

Investing in the most exciting growth companies, transforming the experience of Human Health

Health Innovation targets companies utilising the convergence of technology, driving a revolution in the understanding, prevention, detection and treatment of disease as well as increasing the operational effectiveness of health infrastructure. We see the future of health focussed on prevention of disease and the personalisation of treatments, rather than treating patients when they are already ill. We achieve this by running a concentrated portfolio, containing the best companies (agnostic to sector) with the potential to become outliers in a sector ripe for disruption. We embrace asymmetry and run winners to maximise returns for our clients over a long-term investment horizon.

Typical Number of Holdings: 25-50
Benchmark: MSCI AC World Index
Objective: Approach consistent with achieving +3%p.a. over index over rolling five-year periods

Companies’ competitive advantage and managerial excellence can take at least 5 years to become apparent

LTGG is an unconstrained global equity strategy focused on investing in exceptional long-term growth companies worldwide. The portfolio is typically towards the lower end of its 30-60 stocks range, and always invests in at least six sectors and six countries.

Typical Number of Holdings: 30-60
Maximum Stock Position: 10%
Benchmark: MSCI ACWI/FTSE All World Indices
Objective: Approach consistent with achieving +3% p.a. over index over rolling five year periods

Investing in companies that exert a positive influence on society and operate with integrity

The portfolio is constructed to address four themes: Social Inclusion and Education; Environment and Resource Needs, Healthcare and Quality of Life; and Base of the Pyramid – where companies are addressing basic human needs. We stringently monitor the social impact and financial performance of companies in the portfolio. We believe not only that investment can be used as a powerful force for good, but that companies that exhibit positive social values are increasingly likely to also be the winning investments of the future.

Typical Number of Holdings: 25-50
Maximum Stock Position: 10%
Benchmark: MSCI AC World Index
Objective: +2% p.a. ahead of global stock markets over rolling five year periods

Unlocking exceptional growth sooner and compounding returns for longer by investing in innovative private companies

Private Companies is a long-term global private equity growth strategy. It aims to generate capital growth, by making long-term, high conviction, minority investments in later stage private businesses we believe to have transformational growth potential, which can then be held into public markets.

Typical Number of Holdings: 20-50
Benchmark: Any Public Market Equivalent
Objective: Highly selective approach aiming to deliver outsized returns

A well-established international actively-managed strategy

Our experienced portfolio managers distil a universe of around 3000 companies down to 60–90 stocks, drawing directly on the individual expertise of our regional teams via a Portfolio Construction Group. We typically hold stocks for at least five years – long enough for share price moves to reflect the economic value of the underlying assets.

Objective: At least 2% p.a over benchmark over 3-5 year rolling periods
Typical Number of Holdings: 60-90
Benchmark: MSCI EAFE Index/MSCI AC World ex US Index

Focusing on quality growth to achieve superior long-term returns for clients

We believe the best way to navigate an uncertain world is to build a diversified portfolio of outstanding businesses that have deep competitive advantages and excellent stewardship. These are businesses that can withstand economic cycles and take advantage of unpredictable events to outperform the market over our typical holding period of at least five years.

Objective: +2-3% p.a. over benchmark over rolling five year periods
Typical Number of Holdings: 70-110
Benchmark: MSCI AC World ex US Index

Investing in companies around the world with exceptional prospects for growth.

With an investment horizon of at least 10 years, this approach focuses on the benefits that accrue from compounding returns in exceptional long-term growth opportunities. The fund has a concentrated approach to investing, with significant exposure to a small number of stocks in which the team has the greatest conviction. The strategy is ex-US but may invest up to 10% off benchmark.

Typical Number of Holdings: 20-35
Maximum Stock Position: 10% at time of purchase, 15% limit
Benchmark: MSCI AC World ex US Index
Objective: 3%+ p.a. over five year rolling periods

Investing in a portfolio constructed with little regard for the index

Research is conducted with three aspects in mind – the opportunity available to the company, its ability to execute on that opportunity and the valuation of the business. The investment period is expected to be at least five years, meaning stock turnover is low.

Objective: +2-3% p.a. over benchmark over rolling five year periods
Typical Number of Holdings: Minimum of 50 stocks
Benchmark: MSCI AC World ex US Index

Investing in companies with the ability to capitalise on their competitive advantages

This strategy invests primarily in stocks listed on the MSCI Asia ex Japan Index but may also hold those listed on other exchanges if they derive significant revenues from Asian markets.  We also consider the market valuation of the shares to determine the extent to which others already appreciate the strengths we have identified.

Typical number of holdings: 50-100
Maximum Stock Position: 8% 
Benchmark: MSCI AC Asia ex Japan
Objective: Outperform the index

Deep research and strong ideas

This strategy invests primarily in stocks listed on the stock exchanges of mainland China, Hong Kong and Taiwan. It may also hold securities listed on other exchanges if they derive most of their revenues or profits from China, Hong Kong or Taiwan. Ideas may be generated in various ways including field research, close contact with related companies, even apparent mispricing.

Typical number of holdings: 40-100
Maximum Stock Position: 10% relative to benchmark
Benchmark: MSCI All China Index
Objective: Long-term capital appreciation, outperform the index after fees over rolling five year periods

Investing in a concentrated portfolio of stocks across the Developed Asia region

The decision to buy a stock is reached after considering the opportunity available to the company, its ability to execute on that opportunity, and the valuation of the business. In addition to the team’s own efforts, they also have access to the research capabilities of our Japanese equities, Emerging Markets equities, and Global teams.

Typical Number of Holdings: 30-50
Maximum Stock Position: 5% relative to the index
Benchmark: MSCI Pacific Index
Objective: +2% p.a. over five years, gross of fees vs benchmark

Looking for sustainability and growth over the long term

These strategies invest in global emerging markets, predominantly stocks listed on the MSCI Emerging Markets Index. However, they may hold securities listed on other exchanges provided the companies derive significant revenues from, or have substantial assets in, non-developed markets. We believe that businesses which can grow sustainably, significantly increasing their earnings and cash flow, over a long-term time frame, will be the best rewarded.

Emerging Markets All Cap
Typical number of holdings: 60-100
Maximum Stock Position: 5% relative to benchmark
Benchmark: MSCI Emerging Markets Index
Objective: +3% p.a. over rolling five year periods vs benchmark, gross of fees

Emerging Markets Leading Companies
Typical number of holdings: 35-60
Maximum Stock Position: 5% relative to benchmark
Benchmark: MSCI Emerging Markets Index
Objective: +3% p.a. over rolling five year periods vs benchmark, gross of fees

Our Europe ex UK strategy is a concentrated portfolio of Europe’s great growth companies

The strategy invests in companies with a market value of at least £1 billion while aiming to be different and at times unconventional. We have a maximum holding size of 10% of the portfolio for any single stock, and invest in a minimum effective number of 20 stocks and five industries.  A particular focus is on management quality and alignment: many of our investments are founder-controlled.  We are not seeking to make quick gains - our investment horizon is at least five years.

Typical Number of Holdings: 30-50
Maximum Stock Position: 10% relative to the Index
Representative Benchmark: MSCI Europe ex UK Index
Objective: +2%-3% p.a gross of fees over rolling five-year periods

Continuing a long and successful history of investing in Japan

Our aim is to identify businesses with attractive industry backgrounds, strong competitive positions within those industries, high-quality earnings and favourable attitudes towards shareholders. Turnover in the portfolio tends to be around 25% per annum. We believe that our long-term investment approach differentiates us from the majority of managers investing in Japanese equities.  In particular, we find that growth opportunities are often undervalued in a country where headline economic growth is scarce and misunderstood.

Japan All Cap
Typical Number of Holdings: 45-65
Maximum Stock Position: 10%
Benchmark: TOPIX (but will measure against MSCI Japan, FTSE Japan)
Objective: +2% p.a over five years vs benchmark

Japan Growth
Typical Number of Holdings: 35-55
Maximum Stock Position: 10%
Benchmark: TOPIX (but will measure against MSCI Japan, FTSE Japan)
Objective: +2% p.a over five years vs benchmark

Japan Income Growth
Typical Number of Holdings:45-65
Maximum Stock Position:10%
Benchmark: TOPIX
Objective:+1.5% gross of fees p.a over five years vs benchmark

Japanese Smaller Companies
Typical Number of Holdings: 40-75
Maximum Stock Position: 3%
Benchmark: MSCI Japan Small Cap Index
Objective: +2% p.a over five years vs benchmark

We aim to generate positive, market-beating long-term investment returns through investing in UK-listed equities. This does not mean we are dependent on the success of the UK domestic economy.

With the majority of profits in FTSE All-Share companies being generated overseas, UK equity portfolios are an excellent way to access many global growth opportunities within a legal framework which is well-established. We are resolutely bottom-up in identifying investment ideas – the goal being to invest only in well-managed companies with significant long-term growth opportunities that are run in the interests of shareholders.

Alpha
Typical Number of Holdings: 30-40
Maximum Stock Position: +12% relative to FTSE All-Share. Max 15% in any one stock
Benchmark: FTSE All-Share
Objective: 2%+ net over rolling five years

Focus
Typical Number of Holdings: 50-80
Maximum Stock Position: +8% relative to FTSE All-Share. Max 12% in any one stock
Benchmark: FTSE All-Share
Objective: +1.5-2% net over rolling five years

Core
Typical Number of Holdings: 45-65 direct, plus UK Smaller Companies Fund
Maximum Stock Position: +4% relative to FTSE All-Share*
Benchmark: FTSE All-Share
Objective: +1-1.5% net over rolling five years

*Excludes any Collective Investment Schemes where there are to be no additions over 4% and a hard limit of 6%.

Note: When investing via an OEIC, the 5/10/40 OEIC Rule prevails in relation to the Maximum Stock Position. This is 10% max in any one stock and 40% max in holdings over 5%.

Early stage businesses with drive, energy and entrepreneurial spirit

We focus our new idea generation on long term investment opportunities in companies with a market capitalisation of £1 billion or below at time of purchase. New holdings tend to make up between 0.5% and 1.0% of the portfolio.

Typical Number of Holdings: 50-80
Benchmark: FTSE Small Cap ex Investment Trusts Index
Objective: +2% p.a over rolling five year periods vs benchmark

Concentrated portfolios ensuring impact isn’t diluted in the name of diversification

This strategy aims to deliver outstanding investment performance by identifying exceptional growth businesses which have a special culture, are addressing a large market opportunity and possess a competitive edge. We consider selling stocks only when the fundamental outlook has changed or our view no longer differs significantly from the market.

Typical Number of Holdings: 30-50
Maximum Stock Position: 8% at time of purchase, 15% absolute holding
Benchmark: S&P 500 Index/Russell 1000 Growth
Objective: +2% p.a above benchmark over rolling five year periods