Baillie Gifford is a partnership, wholly owned by its employees, and the company has long emphasised that macro-economic factors do not play a role in how it manages money. Unusually for a business of its size it does not employ professional economists or market strategists.
Baillie Gifford said it does not comment on short-term flows data, but in a recent note to clients James Budden, director of marketing and distribution at Baillie Gifford, said that a combination of worries about China, style rotation and the impact of higher inflation on early stage companies are the reasons for the decline in performance.
Budden wrote: “What is certain is that as long-term growth investors we will not divert from our tried and tested approach. Style drift can be lethal in investing as it betrays investor expectation and incurs needless cost. We fully acknowledge that there will be times when our style is out of fashion – 2021 being an example. Yet we remain committed to finding exceptional companies and supporting them in finding solutions to some of the world’s great problems.”
Ben Yearsley, co-founder of Fairview Consulting, says: "The last thing you should want to happen is that a firm changes its investment style. It's important clients have a blend of different styles and if they have Baillie Gifford funds for the growth style, then they don't want that to change."
Of the merits or otherwise of being invested in one particular style, Ben Seager Scott, head of multi-asset funds at Tilney Smith and Williamson, says: “Even allocating within equities is a multi-dimensional task where you need to consider elements including geography and sector before you even get into factors and styles, before even thinking about the idiosyncratic characteristics of the company.
"If we focus just on styles and factors, there is clearly different strokes for different folks here, but what I think is important is that investors go in with their eyes open and are conscious of their exposures.
"Diversification applies just as much to different style exposures as it does to countries and sectors, and so I think most investors should consider a blend of different styles to benefit from the ‘free lunch’ of diversification. If they are focused in one style, that can be fine for a given investor, they just need to be aware of the risks that come with such concentration.”
As at the end of 2021, 71 per cent of Baillie Gifford’s AUM is in global equity mandates, while just over 5 per cent is in fixed income, meaning the business is more reliant on equity market performance and sentiment than is the case for many of its peers.
david.thorpe@ft.com
