Baillie Gifford UK Growth Trust – A recipe for a rerating?
A comparison of Baillie Gifford UK Growth Trust (BGUK) against its peers suggest that it is the most growth-orientated fund in the group, and so it has likely faced particularly strong headwinds during the last 18 months, as investors have favoured value and defensive stocks.Despite these challenges, BGUK has provided an NAV total return of 4.9% over the last year (peer group average of 3.3%) and its managers say that, at an operational level, its companies continue to perform well. The managers reiterate their long-term confidence in the portfolio, and whilst noting recession risk has increased, they comment that BGUK’s companies are financially sound and have resilient balance sheets.
Both the UK and growth stocks appear cheap, and BGUK is trading at a discount significantly above its longer-term average. This could be a recipe for a strong rerating if the outlook improves, potentially aided by the fact that there are signs that inflation is coming under control.
Baillie Gifford Growth Fund carries on business as an investment trust. Co.'s business is investing in financial assets with a view to profiting from their total return in the form of income and capital growth. Co.'s alternative investment fund manager, Schroder Unit Trusts Limited, implements the investment strategy and manages Co.'s assets in line with the appropriate restrictions placed on Co. by the board, including limits on the type and relative size of holdings which may be held in the portfolio and on the use of gearing, cash, derivatives and other financial instruments as appropriate.
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