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Baillie Gifford UK Growth Trust – Significant catch up potential

After three challenging years, there are now signs that sentiment towards both growth stocks and the wider UK market is improving. Baillie Gifford UK Growth Trust (BGUK) has been a clear beneficiary of this, delivering a marked uptick in performance over the past year. The tide may be turning, but UK equities in general – and growth names in particular – remain deeply out of favour versus their global peers. This leaves significant catch-up potential if conditions continue to improve, particularly as its managers still observe that, in aggregate, its companies are performing well at the operational level.

While the path to any recovery is rarely a straight line, shareholders can take comfort from BGUK’s new single-digit discount control policy, which has already had a tangible impact, and from the fact that there are multiple safeguards in place – including an additional continuation vote in 2027 (as well as the regular five-yearly vote in 2029) and a performance-linked tender offer in 2029 should the trust’s NAV per share lag the FTSE All-Share over the five years to 30 April 2029.