By Mark McSherry
The £300 million Baillie Gifford UK Growth Trust plc said the fund’s net asset value (NAV) total return was 7.1% for the year to April 30, 2025, compared to 7.5% for the FTSE All-Share Index total return.
The fund’s share price total return for the same period was 13.6% as the investment trust company’s discount narrowed from 15.3% to 10.5%.
A final dividend of 5.70p per share is being recommended (2024: 5.60p).
“It has felt like one step forward and one step back,” said the fund. “Relative performance was strong in the first half of the year but poor in the second half.
“The largest detractors to relative performance were: 4imprint, the direct marketer of promotional merchandise, and Renishaw, a world leading engineering company specialising in metrology.
“Games Workshop, a gaming company known for its fantasy game Warhammer, and St James’s Place, a UK wealth manager, were the notable positive contributors to relative performance …
“Following on from the introduction of a conditional tender, based on five-year performance to 30 April 2029, and additional continuation vote in 2027, in January this year the board announced its intention of maintaining the company’s discount in single figures in normal market conditions, building on the initiatives to date to enhance shareholder value.”
Over the year, more than 17.4 million shares — almost 12% of the company’s issued share capital — were bought back into treasury. Since period end to June 10, 2025, a further 1.6 million shares have been bought back into treasury.
Baillie Gifford UK Growth Trust chairman Neil Rogan said: “The directors are all acutely aware that the company remains in a recovery situation.
“We will continue to do all we can to enhance shareholder returns. We know we need to demonstrate clear progress by the time of the next continuation vote.
“But we also know that we are sitting on a company of enormous potential: The UK market as a whole is widely regarded as unusually cheap both by comparison with its own history and with global markets. That alone is a case for optimism.
“If growth stocks start to outperform, either because they are so cheap already or because UK economic growth accelerates from its very low current levels, then a favourable tailwind should be felt again. And if all this coincides with investment trust discounts reverting to normal levels, then the case for BGUK is compelling.”
Edinburgh-based fund manager Baillie Gifford has around £209 billion under management and advice.
Baillie Gifford UK Growth Trust managers Iain McCombie and Milena Mileva wrote: ” … when discussing performance, what was striking in the period was the range of performance of stocks within our concentrated portfolio of 37 companies (36 listed and 1 private).
“Normally, when performance is close to the benchmark, one would reasonably imagine that most stocks would be grouped in a tightish band around the index and there’d be a few outliers (good and bad) beyond that.
“This wasn’t the case in this period.
“Instead, we saw a picture of extremes: for example the shares of the six largest holdings in the portfolio at the year end: Games Workshop, Autotrader, Volution Group, Experian, Wise and AJ Bell, all performed very well reflecting for the most part good underlying operational performance in each of these very different businesses.
“There were a fair few others that are smaller positions which also saw similar positive share price performance such as Just Group, Moonpig and Rightmove. In contrast, Howden Joinery was the only one of our top ten holdings that underperformed.
“However, there were also a notable number of other holdings in the portfolio that performed extremely poorly.
“It’s here that we get to the heart of the matter as it helps explain the more difficult performance of the second half because most of these stocks were economically sensitive businesses such as 4imprint, Inchcape, Ashtead, Renishaw, Bodycote and Page Group. There were also some company specific problems that hurt Diageo, Bunzl and Kainos …”