Edinburgh-based investment giant Baillie Gifford said it has completed its first ever “value assessment” of its UK authorised funds.
“Our conclusion is that value has been delivered for the vast majority of our funds: 35 of our 37 funds provided value,” said Baillie Gifford.
“Of the 35 that provided value, we are monitoring five funds where performance has been behind target.
“Following a strategic review, we closed our three government bond funds, two of which did not provide value.”
The fund group said the Baillie Gifford Active Gilt Fund and Baillie Gifford Active Long Gilt Fund did not provide value.
The Baillie Gifford Active Index-Linked Gilt Investment Fund actually outperformed its target benchmark over the three-year period to March 31, 2020, “with most of the outperformance coming towards the end of this period.”
Prior to this, long-term performance was predominantly impacted by poor returns in 2018.
“Following a strategic review of fixed income investment capabilities during 2019, Baillie Gifford reached the decision to close the range of government bond funds, including this fund, at the end of March 2020,” said the firm.
The five funds being monitored are the Baillie Gifford British Smaller Companies Fund, Baillie Gifford Emerging Markets Bond Fund, Baillie Gifford Investment Grade Bond Fund, Baillie Gifford Sterling Aggregate Bond Fund and the Baillie Gifford Sterling Aggregate Plus Bond Fund.
Baillie Gifford has assets under management and advice of more than £260 billion and its high-profile funds are major shareholders in prominent global companies including Tesla, Amazon, Tencent, Netflix and Alibaba.
“Longer-term investment performance for most of the funds remains very strong,” said Baillie Gifford.
“Indeed, performance for many of our equity funds has been exceptional when compared to their ambitious outperformance targets and their peers …
“Action has been taken in the small number of cases where we feel value has not been delivered.
“Following a strategic review of investment capabilities during 2019, it was concluded that the investment objectives of our UK government bond funds had not been consistently met and it was in the best interests of investors to close these funds.”
Michael Wylie, chairman, Baillie Gifford & Co, said: “We believe we delivered value to investors for 35 of our 37 funds with longer-term performance remaining very strong and costs low, in line with our policy of maintaining our fees at fair and reasonable levels.
“Where we feel value has not been delivered, appropriate action has been taken …
“We will learn from this and will strive to improve in everything we do.”
Baillie Gifford’s actions were in response to the Financial Conduct Authority’s (FCA) requirement for all managers of UK-domiciled investment funds to carry out an annual review to assess the overall value delivered to clients.
James Budden, Director of Marketing and Distribution at Baillie Gifford, said: “We believe we set a rigorous standard in assessing our funds and are pleased the report finds the clear majority of our funds provide value for clients.
“This report highlights an impressive consistency of outperformance across a range of sectors and time periods which in turn says much for the skill and dedication of the investment teams across the firm.”