The board of the £259 million investment trust Schroder UK Growth Fund plc has terminated Schroder Unit Trusts Limited as the fund’s manager and given the mandate to Edinburgh-based fund management giant Baillie Gifford & Co.
The portfolio will now be co-managed by Baillie Gifford’s Iain McCombie and Milena Mileva.
Once Baillie Gifford’s appointment becomes effective, applications will be made to change the fund’s name and ticker to “Baillie Gifford UK Growth Fund plc” and “BGUK”, respectively.
Baillie Gifford had assets under management and advice of £179 billion as at December 31, 2017.
“The appointment of Baillie Gifford on the terms set out in the heads of terms is conditional on the execution of a new investment management agreement and obtaining the necessary regulatory clearances for Baillie Gifford AIFM to be appointed as the company’s AIFM,” said Schroder UK Growth Fund.
“It is disappointing to note that the company’s long-term investment performance is considerably below the board’s expectation and has lagged the benchmark since inception.
“Further, despite its ongoing share buyback policy, the company has struggled with a persistent and wide discount to NAV.
“Accordingly, the board has concluded that, in order to provide the best investment outcome for existing investors and to position the company to attract new investors, it should make the change to implement a new, ‘best ideas’ investment approach managed by Baillie Gifford, an established manager of investment trusts with a long-term track record in achieving capital growth from UK equities.
“Although the company’s investment objective and policy will not change, Baillie Gifford will realign the portfolio to invest in a bespoke, ‘best ideas’ portfolio, with approximately 40 stocks, which will offer shareholders a UK-focussed high-growth investment proposition.”
Schroder UK Growth Fund Carolan Dobson said: “The board is delighted to announce its intention to appoint Baillie Gifford as the company’s AIFM.
“The board is committed to providing investors with exposure to a high-quality portfolio of UK stocks that have the potential to deliver significant outperformance over the long term and we believe that Baillie Gifford is the right manager to take the company forwards.
“With its long-term, bottom-up approach, Baillie Gifford has a proven track record in managing UK equities.
“We believe that a bespoke UK ‘best ideas’ portfolio co-managed by Iain McCombie and Milena Mileva will provide a unique investment opportunity that should, over time, deliver strong returns to existing investors and serve to attract new investors to the company.”