In focus
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This is one of the few equity funds in the IA universe that has managed
to eke out a positive return this year
Baillie Gifford China
“We rejoice in the progress China
has made allowing us to make this
change and are excited as ever about
the prospects for one of the most
important investment themes of our
generation.”
The managers note the Chinese
economy is still transitioning, shifting
from a focus on low-value exports,
high investment and infrastructure
spending, to domestic consumption
and services. This has resulted
in rising wealth and an insatiable
demand for luxury goods.
As a result, the fund has
approximately 60 per cent invested
in consumer products, telecoms and
technology. Its top-10 holdings include
tech giants Alibaba and Tencent.
Baillie Gifford China has made 84.45
per cent over the past five years,
compared with gains of 40.12 per cent
from its sector and 7.96 per cent from
its benchmark.
Even though the coronavirus
originated in China, the country
has held up well from an
investment perspective this year, with
the MSCI China index broadly flat.
It was the swift response from the
government and reassurance from
president Xi Jinping that allowed
the domestic economy to get back
on its feet so quickly, according to
Mike Gush, co-manager of the Baillie
Gifford China fund.
“The extreme measures China
took have suppressed the virus and
allowed businesses to take the next
step – opening offices,” he said.
Baillie Gifford China aims to
outperform the MSCI China All
Shares index by at least 2 percentage
points per annum over rolling fiveyear
periods. It has consistently
beaten this target since launch,
outperforming the benchmark and
its IA China/Greater China sector
average over one, three, five and 10
years. It has even managed to eke out
a positive return so far in 2020.
However, the fund has evolved
significantly over this time and last
year its name was changed from
Baillie Gifford Greater China.
“The ethos of the fund has always
been to capture the Chinese growth
opportunity in its broadest sense,
including the technology and
financial centres of Taiwan and
Hong Kong,” explained Gush and comanager
Sophie Earnshaw.
“Given the staggering development
in China over the past decade, and the
significant opening up of the domestic
A share market, we believe that the
time is right to realign our investment
universe. Going forward we will be
investing only in Chinese companies
and will change the fund’s name.
FACT BOX
MANAGERS: Mike Gush & Sophie Earnshaw / LAUNCHED: 19/11/2008 / FUND SIZE: £150m /
OCF: 0.78%
CROWN RATING
PERFORMANCE OF FUND VS SECTOR AND INDEX OVER 5YRS
Baillie Gifford IA China/Greater MSCI China All
China (84.45%) China (40.12%) Shares (7.96%)
100%
80%
60%
40%
20%
0%
-20%
-40%
May15
Source: FE Analytics
Nov
May16
Nov
May17
Nov
May18
Nov
May19
Nov
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