Capital at risk

Investment strategy

International Alpha

We believe the best way to navigate an uncertain world is to build a diversified portfolio of outstanding companies with deep competitive advantages and excellent stewardship.

Loch Coruisk viewed from a moantain top from above the valley.

An emphasis on quality

We invest across four types of growth: quality compounders, rapid growth, through-cycle winners and capital allocators. Our aim is to build a portfolio which can withstand economic cycles and take advantage of unpredictable events.

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Your capital is at risk. Past performance is not a guide to future returns.    Beatrice Faleri: We are used to thinking of extreme market concentration as a US phenomenon. But is that spreading overseas?  Even though International markets are not nearly as concentrated than the S&P 500, the last quarter has been an unusual one, in that two industries, semiconductor equipment and technology hardware, have driven almost 90 per cent of index returns. The driving theme behind this surges is, no prize for guessing, artificial intelligence.  Building and running AI models takes an enormous investment in compute infrastructure. The big US players are spending vast sums on this build-out. And as a result, the companies supplying the chips and the equipment to produce them, and particularly the memory players, are experiencing a near-unprecedented surge in profits. This is a rally built on earnings, not multiples.  But that kind of concentration can feel unnerving. But for us, as active, fundamental, growth investors, it's also an opportunity. When returns are this dispersed, the prize for good stock-picking can be significant. And last quarter, your portfolio has stayed ahead of the market, helped by some exceptional operational performance from companies we know extremely well and can hold in size.  Take Samsung, which we've held for well over a decade. It's breaking its own profitability records: this year its operating profit is expected to rise more than sixfold, to around $185bn, more than any of the Magnificent Seven except Nvidia. And demand for its High Bandwidth Memory chips still far outstrips what it can supply. Yet less than a year ago, Samsung was written off as an also-ran in leading-edge memory, and pessimism was at its peak. We kept it as a large holding anyway, confident that its process advantage and balance-sheet strength would let it catch up.  The rest of the market now sees all this too, but we believe that our key insight - that memory will continue to be the key bottleneck to inference - is still underappreciated, and that this is why we continue expressing strong conviction in the stock. That is how, as active managers, we add value when a single theme drives the market: by staying selective within that theme and backing the names we think are still mispriced. That's exactly what we've done. We have diversified across the AI supply chain rather than crowding into the obvious winners, and our attribution shows it, with some of this quarter's strongest contributions coming from newer holdings like MediaTek and SoftBank.  But the open secret is that this AI rally won't last forever. We are very alert to this, and this is why we've kept broadening your portfolio well beyond AI. In fact, we've recycled some of the semiconductor gains into high-quality businesses the market has written off as AI losers, software names like Constellation Software and Scout24. We've also bought new names in areas that we think will define the next decade of growth, from aircraft engines, grid investment, and immunotherapies.  It is an uncertain world we are living in. And in an uncertain world, you want more shots on goal. That’s the reason for our broadening the sources of growth within the portfolio too. And the risk data shows it’s working: lower tracking error, less valuation risk, and less reliance on any single theme.  Of course, the long-term performance numbers will take a while to turn around, but our confidence in the portfolio from here comes from the strong and broad operational delivery we are seeing across all of your holdings. More than two-thirds of the portfolio is expected to deliver double-digit earnings growth this year, and almost half has had earnings forecasts revised up so far in 2026, and nine holdings are posting record earnings. This goes well beyond the chip names. It runs from a securities exchange in Brazil to an employment platform in Japan, and in companies like Tencent and MercadoLibre, where the delivery of operational returns has been excellent even where the market hasn't yet rewarded it.  That leaves your portfolio in an unusual position. Despite owning exceptional companies at the heart of the world's most powerful growth trends, it has largely lost its valuation premium to the wider market. Basically, you're paying little or nothing extra for stronger margins, better returns and healthier balance sheets than the market as a whole.  There's far more we could say, and we look forward to those conversations. But if I had to sum it up, it would be: this is a market rewarding a very narrow set of winners. We own some of the very best of them, and we are using this unusual market environment to build a portfolio that can thrive in many more versions of the future than just one, a portfolio that is balanced, ambitious, and poised for outperformance.    <h3 class="TABLEHEADER1212pt">International Alpha </h3> Annual past performance to 30 June each year (%) <table border="1" style="border-collapse: collapse; width: 100%; border-width: 0px; height: 92.9923px;"> <tbody> <tr style="height: 18.6641px;"> <td style="border-width: 1px 1px 2px; border-style: solid; border-color: rgb(204, 204, 204) rgb(204, 204, 204) rgb(0, 0, 0); border-image: initial; padding: 10px; height: 18.6641px; width: 49.6897%;"> </td> <td style="border-width: 1px 1px 2px; border-style: solid; border-color: rgb(204, 204, 204) rgb(204, 204, 204) rgb(0, 0, 0); border-image: initial; padding: 10px; height: 18.6641px; text-align: center; width: 10.5918%;">2022</td> <td style="border-width: 1px 1px 2px; border-style: solid; border-color: rgb(204, 204, 204) rgb(204, 204, 204) rgb(0, 0, 0); border-image: initial; padding: 10px; height: 18.6641px; text-align: center; width: 10.5918%;">2023</td> <td style="border-width: 1px 1px 2px; border-style: solid; border-color: rgb(204, 204, 204) rgb(204, 204, 204) rgb(0, 0, 0); border-image: initial; padding: 10px; height: 18.6641px; text-align: center; width: 9.67642%;">2024</td> <td style="border-width: 1px 1px 2px; border-style: solid; border-color: rgb(204, 204, 204) rgb(204, 204, 204) rgb(0, 0, 0); border-image: initial; padding: 10px; height: 18.6641px; text-align: center; width: 9.67642%;">2025</td> <td style="border-width: 1px 1px 2px; border-style: solid; border-color: rgb(204, 204, 204) rgb(204, 204, 204) rgb(0, 0, 0); border-image: initial; padding: 10px; height: 18.6641px; text-align: center; width: 9.67642%;">2026</td> </tr> <tr style="height: 37px;"> <td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 37px; width: 49.6897%;">International Alpha Composite (gross)</td> <td style="border: 1pt solid rgb(204, 204, 204); padding: 7.5pt; height: 27.75pt; width: 10.5918%; text-align: center;">  -34.1 </td> <td style="border-width: 1pt 1pt 1pt medium; border-style: solid solid solid none; border-color: rgb(204, 204, 204) rgb(204, 204, 204) rgb(204, 204, 204) currentcolor; padding: 7.5pt 7.5pt 7.5pt 0.75pt; height: 27.75pt; width: 10.5918%; text-align: center;">  18.4  </td> <td style="border-width: 1pt 1pt 1pt medium; border-style: solid solid solid none; border-color: rgb(204, 204, 204) rgb(204, 204, 204) rgb(204, 204, 204) currentcolor; padding: 7.5pt; height: 27.75pt; width: 9.67642%; text-align: center;"> 8.6  </td> <td style="border-width: 1pt 1pt 1pt medium; border-style: solid solid solid none; border-color: rgb(204, 204, 204) rgb(204, 204, 204) rgb(204, 204, 204) currentcolor; padding: 7.5pt; height: 27.75pt; width: 9.67642%; text-align: center;"> 19.7  </td> <td style="border-width: 1pt 1pt 1pt medium; border-style: solid solid solid none; border-color: rgb(204, 204, 204) rgb(204, 204, 204) rgb(204, 204, 204) currentcolor; padding: 7.5pt 7.5pt 7.5pt 0.75pt; height: 27.75pt; width: 9.67642%; text-align: center;">  8.8 </td> </tr> <tr style="height: 18.6641px;"> <td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6641px; width: 49.6897%;">International Alpha Composite (net)</td> <td valign="bottom" style="border-width: medium 1pt 1pt; border-style: none solid solid; border-color: currentcolor rgb(204, 204, 204) rgb(204, 204, 204); padding: 7.5pt; height: 14pt; width: 10.5918%; text-align: center;"> -34.5 </td> <td valign="bottom" style="border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: currentcolor rgb(204, 204, 204) rgb(204, 204, 204) currentcolor; padding: 7.5pt; height: 14pt; width: 10.5918%; text-align: center;"> 17.7 </td> <td valign="bottom" style="border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: currentcolor rgb(204, 204, 204) rgb(204, 204, 204) currentcolor; padding: 7.5pt; height: 14pt; width: 9.67642%; text-align: center;"> 8.0 </td> <td valign="bottom" style="border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: currentcolor rgb(204, 204, 204) rgb(204, 204, 204) currentcolor; padding: 7.5pt; height: 14pt; width: 9.67642%; text-align: center;"> 19.0 </td> <td valign="bottom" style="border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: currentcolor rgb(204, 204, 204) rgb(204, 204, 204) currentcolor; padding: 7.5pt; height: 14pt; width: 9.67642%; text-align: center;"> 8.2 </td> </tr> <tr style="height: 18.6641px;"> <td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.6641px; width: 49.6897%;">MSCI ACWI ex US Index</td> <td style="border-width: medium 1pt 1pt; border-style: none solid solid; border-color: currentcolor rgb(204, 204, 204) rgb(204, 204, 204); padding: 7.5pt; height: 14pt; width: 10.5918%; text-align: center;">  -19.0 </td> <td style="border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: currentcolor rgb(204, 204, 204) rgb(204, 204, 204) currentcolor; padding: 7.5pt; height: 14pt; width: 10.5918%; text-align: center;"> 13.3  </td> <td style="border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: currentcolor rgb(204, 204, 204) rgb(204, 204, 204) currentcolor; padding: 7.5pt; height: 14pt; width: 9.67642%; text-align: center;"> 12.2  </td> <td style="border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: currentcolor rgb(204, 204, 204) rgb(204, 204, 204) currentcolor; padding: 7.5pt; height: 14pt; width: 9.67642%; text-align: center;"> 18.4  </td> <td style="border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: currentcolor rgb(204, 204, 204) rgb(204, 204, 204) currentcolor; padding: 7.5pt; height: 14pt; width: 9.67642%; text-align: center;"> 28.3  </td> </tr> </tbody> </table>   Annualised returns to 30 June 2026 (%) <table border="1" style="border-collapse: collapse; width: 100%; border-width: 0px; height: 93.3523px;"> <tbody> <tr style="height: 36.9886px;"> <td style="border-width: 1px 1px 2px; border-style: solid; border-color: rgb(204, 204, 204) rgb(204, 204, 204) rgb(0, 0, 0); border-image: initial; padding: 10px; height: 36.9886px; width: 61.3276%;"> </td> <td style="border-width: 1px 1px 2px; border-style: solid; border-color: rgb(204, 204, 204) rgb(204, 204, 204) rgb(0, 0, 0); border-image: initial; padding: 10px; height: 36.9886px; width: 13.0762%; text-align: center;">1 year</td> <td style="border-width: 1px 1px 2px; border-style: solid; border-color: rgb(204, 204, 204) rgb(204, 204, 204) rgb(0, 0, 0); border-image: initial; padding: 10px; height: 36.9886px; width: 12.684%; text-align: center;">5 years</td> <td style="border-width: 1px 1px 2px; border-style: solid; border-color: rgb(204, 204, 204) rgb(204, 204, 204) rgb(0, 0, 0); border-image: initial; padding: 10px; height: 36.9886px; width: 12.8147%; text-align: center;">10 years</td> </tr> <tr style="height: 18.7879px;"> <td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.7879px; width: 61.3276%;">International Alpha Composite (gross)</td> <td width="13%" style="width: 13.0762%; border: 1pt solid rgb(204, 204, 204); padding: 7.5pt; height: 14.1pt; text-align: center;">  8.8 </td> <td width="12%" style="width: 12.684%; border-width: 1pt 1pt 1pt medium; border-style: solid solid solid none; border-color: rgb(204, 204, 204) rgb(204, 204, 204) rgb(204, 204, 204) currentcolor; padding: 7.5pt; height: 14.1pt; text-align: center;"> 2.0 </td> <td width="12%" style="width: 12.8147%; border-width: 1pt 1pt 1pt medium; border-style: solid solid solid none; border-color: rgb(204, 204, 204) rgb(204, 204, 204) rgb(204, 204, 204) currentcolor; padding: 7.5pt; height: 14.1pt; text-align: center;"> 9.2 </td> </tr> <tr style="height: 18.7879px;"> <td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.7879px; width: 61.3276%;">International Alpha Composite (net)</td> <td width="13%" style="width: 13.0762%; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: currentcolor rgb(204, 204, 204) rgb(204, 204, 204); padding: 7.5pt; height: 14.1pt; text-align: center;">  8.2 </td> <td width="12%" style="width: 12.684%; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: currentcolor rgb(204, 204, 204) rgb(204, 204, 204) currentcolor; padding: 7.5pt; height: 14.1pt; text-align: center;"> 1.4  </td> <td width="12%" style="width: 12.8147%; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: currentcolor rgb(204, 204, 204) rgb(204, 204, 204) currentcolor; padding: 7.5pt 7.5pt 7.5pt 0.75pt; height: 14.1pt; text-align: center;">   8.5  </td> </tr> <tr style="height: 18.7879px;"> <td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.7879px; width: 61.3276%;">MSCI ACWI ex US Index</td> <td width="13%" style="width: 13.0762%; border-width: medium 1pt 1pt; border-style: none solid solid; border-color: currentcolor rgb(204, 204, 204) rgb(204, 204, 204); padding: 7.5pt; height: 14.1pt; text-align: center;">  28.3 </td> <td width="12%" style="width: 12.684%; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: currentcolor rgb(204, 204, 204) rgb(204, 204, 204) currentcolor; padding: 7.5pt 7.5pt 7.5pt 0.75pt; height: 14.1pt; text-align: center;">  9.3 </td> <td width="12%" style="width: 12.8147%; border-width: medium 1pt 1pt medium; border-style: none solid solid none; border-color: currentcolor rgb(204, 204, 204) rgb(204, 204, 204) currentcolor; padding: 7.5pt; height: 14.1pt; text-align: center;"> 10.5  </td> </tr> </tbody> </table> Source: Revolution, MSCI. US dollars. Net returns have been calculated by reducing the gross return by the highest annual management fee for the composite. 1 year figures are not annualised. Past performance is not a guide to future returns. Legal notice: MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indexes or any securities or financial products. This report is not approved, endorsed, reviewed or produced by MSCI. None of the MSCI data is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such. <h3>Risk factors </h3> This communication was produced and approved in July 2026 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, but is classified as advertising under Art 68 of the Financial Services Act (‘FinSA’) 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 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. Baillie Gifford Overseas Limited provides investment management and advisory services to non-UK Professional/Institutional clients only. Baillie Gifford Overseas Limited is wholly owned by Baillie Gifford & Co. Baillie Gifford & Co and Baillie Gifford Overseas Limited are authorised and regulated by the FCA in the UK.  Persons resident or domiciled outside the UK should consult with their professional advisers as to whether they require any governmental or other consents in order to enable them to invest, and with their tax advisers for advice relevant to their own particular circumstances. Financial intermediaries This communication is suitable for use of financial intermediaries. Financial intermediaries are solely responsible for any further distribution and Baillie Gifford takes no responsibility for the reliance on this document by any other person who did not receive this document directly from Baillie Gifford.

International Alpha Q2 update

Investment specialist Beatrice Faleri reflects on recent performance, portfolio changes and market developments.

Embracing every shade of growth

International Alpha is distinctly long term. We aim to outperform the MSCI ACWI ex-US benchmark by 2-3 per cent per annum over rolling five-year periods.

Our portfolio contains 60-90 holdings. We seek to take advantage of market inefficiencies by investing across different types of growth company, which given our time horizon allows us to take advantage of their idiosyncratic growth opportunities.

We find these companies through bottom-up research, holding on for the long term to capture the potential benefits of compounded growth.

The performance target is aspirational and is not guaranteed. We don’t use it to compile the portfolio and returns will vary. A single performance target may not be appropriate across all vehicles and jurisdictions. We may not meet our investment objectives if, for example, our growth investment style is out of favour or we misjudge the long-term earnings growth of our holdings.

A promising process

The International Alpha portfolio has a high active share, a genuinely long-term approach and a blend of high-quality growth companies that looks to exploit market inefficiencies by investing across all shades of growth. To do this we:

Take a long-term perspective, resulting in low portfolio turnover
Invest from the bottom up, supported by in-depth fundamental analysis
Have a quality-growth orientation
Follow a patient, repeatable process, drawing on the best ideas from firm-wide research

To invest in growth is to say that society will achieve more tomorrow than it does today… Curiosity should be at the heart of all good investment research.

Jenny Davis

Meet the managers

Documents

Philosophy and process

Explore our investment philosophy and the processes around how the team constructs the portfolio.

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Quarterly update

Get the latest investment commentary, portfolio overview, transactions and performance information alongside governance engagement and voting.

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SMA Factsheet

Get the latest portfolio overview and performance information.

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Invest in this strategy

You can invest in this strategy through the following fund(s).

Invest through other vehicles

Get in touch to learn about the other ways to invest, including:

Baillie Gifford International Alpha Collective Investment Trust (CIT)
Separate account
SMA

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Strategy portfolio holdings

A list of the top 10 holdings that the representative portfolio invests in.

All figures up to: 30 June 2026

#	Company	Fund %
1	TSMC	7.8%
2	Samsung Electronics	6.5%
3	Tencent	2.8%
4	ASML	2.6%
5	Rio Tinto	2.6%
6	Mediatek	2.5%
7	Deutsche Boerse	2.3%
8	Roche Holding AG	2.1%
9	DSV	2.0%
10	Discovery Ltd	1.8%

Strategy holdings by sector

All figures up to: 30 June 2026

Total: 100%

Strategy holdings by region

All figures up to: 30 June 2026

Total: 100%

Please note

The information contained on this page is intended as a guide only and should not be relied upon when making investment decisions. All holdings information is unaudited. Source Baillie Gifford & Co. Please note that totals may not add due to rounding.