By Mark McSherry
The £600 million Baillie Gifford US Growth Trust plc announced its share price and net asset value (NAV) returned -45.5% and -35.3% respectively in the year to May 31, 2022, amid the global stock market rout.
This compares with a total return of 12.2% for the S&P 500 Index (in sterling terms).
“We are currently seeing a significant dislocation between share prices and fundamentals but the prospects for the innovators that are driving change remain bright,” said the fund.
US Growth Trust’s 10 largest investments at May 31 were Space Exploration Technologies, Tesla, Stripe, The Trade Desk, Moderna, Amazon, Brex, Faire Wholesale, Shopify and Illumina.
From March 23, 2018, the fund’s launch date, to May 31, 2022, the US Growth Trust’s share price and NAV returned 67.2% and 95.6% respectively — compared with a total return of 93% for the S&P 500 Index.
US Growth Trust plc seeks to invest predominantly in listed and private US companies which it believes have the potential “to grow substantially faster than the average company” and to hold onto them for long periods of time “in order to produce long term capital growth.”
US Growth Trust is managed by Baillie Gifford, the Edinburgh-based fund management group with around £254 billion under management and advice in active equity and bond portfolios for clients in the UK and throughout the world, as at August 5, 2022.
Those assets are down from roughly £365 billion at the end of 2021. Baillie Gifford has suffered amid the brutal global sell-off in technology and growth stocks, which feature heavily in the fund management group’s portfolios.
A number of high flying funds and investment trusts managed by Baillie Gifford came back down to earth with a bang in the first quarter of 2022.
US Growth Trust said on Tuesday it held 24 private company investments, comprising 36.4% of total assets, at the end of May.
“We added a few listed holdings, participating in the IPOs of Rivian Automotive, HashiCorp and Duolingo …” said the fund.
“We sold Zillow, Vroom, Glaukos and Lyft, which had veered off track from their forward-looking hypotheses …
“We made seven additional private company investments: BillionToOne, Blockstream, Databricks, Discord, Faire Wholesale, Snyk and Solugen …
“Three of our existing private company holdings, Aurora Innovation, Ginkgo Bioworks and Warby Parker, went public during the period …”
The fund’s portfolio managers Gary Robinson and Kirsty Gibson wrote in their Managers’ Review: “It has been a difficult year.
“We are in a period of heightened geopolitical and economic uncertainty and the short-term outlook is unclear.
“We do not believe there is value in us making macro predictions. This is not where our core skill set lies.
“We do not know what inflation or GDP growth this year will be or next. And even if we did, we’re not convinced it would help us make better long-term decisions.
“What we remain focused on is trying to identify and own the exceptional growth companies in America.
“Exceptional growth companies address large market opportunities, and it is their ability to capture these opportunities, rather than economic cycles, which will be the primary determinant of long-term outcomes.”