Edinburgh asset management giant Baillie Gifford has written to investors in its Baillie Gifford Health Innovation Fund to inform them of the fund’s closure after its assets fell to under £26 million.

The fund told investors it was launched in December 2020 with the aim of investing in companies in the healthcare industry focussed on innovation — but since then both the healthcare industry and the Baillie Gifford Health Innovation investment strategy had faced “significant challenges.”

The firm said it considered merging Health Innovation with another of its funds, but said it does not manage another fund that is similar “in terms of focussing on investing in companies seeking improvement to human health.”

It also considered a merger with a fund managed by another company but “we do not believe that the fund size would be attractive to another manager, and accordingly we do not consider such a merger to be a commercially viable alternative to closure.”

It added: ” … we do not believe the Fund has a reasonable prospect of meeting the needs and objectives of investors in the future.”

Baillie Gifford Health Innovation Fund said: “We are writing to inform you that we have taken the decision to close the Fund …

“This letter provides you with formal notice that we intend to commence termination of the Fund on 13 November 2024 (or such other date as we may notify you in writing) …

“Following a strategic review of our investment capabilities we, as the authorised corporate director of the Fund, and Baillie Gifford & Co, as the Fund’s investment adviser, have concluded it is in the best interests of shareholders to close the Fund …

“We launched the Fund in December 2020 with the aim of investing in companies in the healthcare industry focussed on innovation.

“Since that time, both the healthcare industry and the Baillie Gifford Health Innovation investment strategy that the Fund is part of have faced significant challenges, and as a result, the assets under management (AUM) of the Fund have declined to just under £26m as of 27 September 2024.

“We and Baillie Gifford & Co have therefore decided to close the Baillie Gifford Health Innovation investment strategy, which includes the Fund …

“We do not have any expectation of meaningful future investment into the Fund and as a result we do not believe the Fund has a reasonable prospect of meeting the needs and objectives of investors in the future.

“Accordingly, we, together with the Fund’s investment adviser, have determined it is no longer commercially viable to continue to operate the Fund.”

On termination proceeds, the fund said: “We expect to send notice to shareholders in the Fund of their pro-rata termination proceeds on 13 November 2024 and that shareholders in the Fund will receive their Termination Proceeds on or around 15 November 2024 …”