Investors should carefully consider the objectives, risks, charges and expenses of the Fund before investing. This information and other information about the Fund can be found in the prospectus and summary prospectus. For a prospectus or summary prospectus please visit our website at https://usmutualfund.bailliegifford.com. Please carefully read the Fund’s prospectus and related documents before investing. Securities are offered through Baillie Gifford Funds Services LLC, an affiliate of Baillie Gifford Overseas Limited and a member of FINRA.
Stand on a footbridge during rush hour in almost any major commercial city and you’ll see a similar scene: traffic slowed to a crawl, frustration boiling over, the occasional flare-up of road rage.
This is true of Delhi’s commute too. But there is one big difference. If you peered into the cars travelling across the Indian capital, you’d soon notice that almost all the workers were men.
Only 21 per cent of Indian women work in its formal economy, according to the World Bank. Even within the Sensex 30 group of India’s 30 largest companies, women make up just 27 per cent of the workforce.
What’s more, the figures have worsened over time. In 1990, the workforce participation rate of India’s women was 30 per cent. The drop since then is a big problem for India as it aspires to emulate South Korea and China, but in fact measures closer to Pakistan and Morocco on this metric.
This puzzle is perplexing as women’s education in India has improved. Female literacy rose from 40 per cent in 1991 to 70 per cent in 2018. University enrolment has also increased. So why are fewer women working even as they become more skilled?
As you would expect, the answer is complicated, but two reasons stand out. Firstly, Indian women mostly work in sectors that have shrunk or stalled. Take agriculture – its contribution to India’s GDP has declined while manufacturing and services have grown. Women have struggled to escape farming and get a foothold in manufacturing. So, as agriculture shrank, so did women’s work.
The service sector in India has boomed. But the professions where women dominate – including nursing and teaching – have not grown as fast as male-dominated ones. In fact, women get less than 19 per cent of the jobs in India’s 10 fastest growing occupations.
Secondly, studies suggest that rising family incomes have, perversely, pushed women out of the workforce. India is a patriarchal society, where having the financial heft to keep women at home improves a family’s social status. So, as India’s economy grows and family incomes rise, more wives are leaving work.
Amazon v Reliance
But why should investors care?
The employment gap means industries may evolve differently in India than elsewhere. Take online groceries. One reason people internet shop is to save time. But if women aren’t spending hours of their day at work and commuting, then time is less of a constraint.
This could affect corporate fortunes. Reliance and Amazon are battling for dominance in Indian e-groceries using, essentially, two different strategies. Reliance is more focused on partnering with the small neighbourhood stores called Kiranas, where most Indians buy groceries. Amazon is betting big that Indians want doorstep deliveries.
If the extra time Indian women have makes them less willing to pay more for home drop-offs, the home-grown firm has the advantage. But if households still prize convenience over all else, then the US ecommerce giant has the better strategy. Thinking about the employment gap raises questions that might matter.
The employment gap also exposes opportunities. Vedantu provides after-school classes via the internet. Many are group activities with up to 350 pupils in one class, but the company wants to offer more one-to-one tutorials. In most countries, that would be an expensive endeavour. But the ed-tech firm can tap into India’s huge pool of educated but unemployed women.
Another business harnessing this opportunity is Meesho, an online store for women’s clothing and accessories. The majority of its 15 million resellers are women, running home-based businesses through their social networks. Meesho is essentially a mobile-first ‘Indian Shopify’ and it has seen meteoric growth.
Food delivery firm Zomato – listed in July. Its key rival, Swiggy, will eventually float too. Could their market be smaller than analysts expect because so many women are at home and have both the time and social pressure to cook? Zomato and Swiggy’s revenues are both growing quickly and they have ambitious expansion plans, but asking how things might be different in India is useful.
ESG scores
There are implications for ESG investing too. Say you read 35 per cent of an Indian company’s staff are female. Without context, you’d likely label it a laggard. With knowledge, you might laud its achievement, before nudging it to do more. Companies don’t operate in vacuums and ESG metrics should reflect this.
Finally, India pays a macroeconomic price. It’s hard to quantify the lost potential, but consultants at McKinsey estimate that its GDP would be 18 per cent larger by 2025 if it matched best-in-Asia Singapore, where 62 per cent of women are employed. That equates to a $770bn gain.
To get anywhere near that level requires a cultural shift involving radical changes to societal expectations and the opportunities available to India’s working-age women.
But for now, investors who keep in mind India’s gender employment gap can gain an added perspective on its many companies and the opportunities they present.
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Risk Factors
This content 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.
Any stock examples, or images, used in this content 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.
As with all mutual funds, the value of an investment in the fund could decline, so you could lose money.
The most significant risks of an investment in the Baillie Gifford Emerging Markets Equities Fund or the Baillie Gifford Asia Ex Japan Fund are Investment Style Risk, Growth Stock Risk, Long-Term Investment Strategy Risk, Geographic Focus Risk, Emerging Markets Risk and Asia Risk. The Fund is managed on a bottom up basis and stock selection is likely to be the main driver of investment returns. Returns are unlikely to track the movements of the benchmark. The prices of growth stocks can be based largely on expectations of future earnings and can decline significantly in reaction to negative news. The Fund is managed on a long-term outlook, meaning that the Fund managers look for investments that they think will make returns over a number of years, rather than over shorter time periods. The Fund focuses on investments in a limited number of countries or regions, meaning it may offer less diversification and be more volatile than other funds. Investing in emerging markets can involve additional market, credit, currency, liquidity, legal or political risks than investing in more developed markets. Some Asian securities may be less liquid than US or other foreign securities. They can be affected by high inflation, currency fluctuations, political instability and less efficient markets. Many Asian economies are dependent on international trade and only a few industries and can be badly affected by trade barriers. Other Fund risks include: China Risk, Conflicts of Interest Risk, Currency Risk, Equity Securities Risk, Frontier Markets Risk, Government and Regulatory Risk, Information Technology Risk, IPO Risk, Large-Capitalization Securities Risk, Liquidity Risk, Market Disruption and Geopolitical Risk, Market Risk, Non-U.S. Investment Risk, Service Provider Risk, Settlement Risk, Small-and Medium-Capitalization Securities Risk, and Valuation Risk. Additionally, for the Baillie Gifford Emerging Markets Equities Fund, Focused Investment Risk and Underlying Funds Risk. For the Baillie Gifford Asia ex Japan Fund, New and Smaller-Sized Funds Risk.
For more information about these and other risks of an investment in the funds, see 'Principal Investment Risks' and 'Additional Investment Strategies' in the prospectus. The Baillie Gifford Emerging Markets Equities Fund seeks capital appreciation. The Baillie Gifford Asia ex Japan Fund also seeks capital appreciation. There can be no assurance, however, that the fund will achieve its investment objective.
The funds are distributed by Baillie Gifford Funds Services LLC. Baillie Gifford Funds Services LLC is registered as a broker-dealer with the SEC, a member of FINRA and is an affiliate of Baillie Gifford Overseas Limited.
All information is sourced from Baillie Gifford & Co and is current unless otherwise stated.
The images used in this article are for illustrative purposes only.
| Holdings | Fund % |
| TSMC | 9.2 |
| Samsung Electronics | 5.9 |
| Alibaba | 4.3 |
| Petrobras | 4.3 |
| Tencent | 4.0 |
| Reliance Industries | 3.9 |
| Sberbank | 3.9 |
| Norilsk Nickel | 2.6 |
| HDFC | 2.5 |
| China Merchants Bank | 2.4 |
| Holdings | Fund % |
| SEA Limited | 7.1 |
| TSMC | 4.1 |
| JD.com | 2.9 |
| Samsung SDI | 2.8 |
| Reliance Industries | 2.8 |
| Tata Motors | 2.6 |
| Samsung Electronics | 2.6 |
| MMG Limited | 2.4 |
| Hoa Phat Group | 2.3 |
| Vedanta | 2.2 |
It should not be assumed that recommendations/transactions made in the future will be profitable or will equal performance of the securities mentioned. A full list of holdings is available on request. The composition of the fund's holdings is subject to change. Percentages are based on securities at market value.
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