SCOTTISH
BAILLIE
MORTGAGE
GIFFORD
INVESTMENT
UK GROWTH
TRUST
FUND
Your portfolio
26 / 27
Low-hanging fruit
However, Gannatti says the main
reason why passives have nothing to
fear from algorithmic trading attacks
is far simpler than anything to do with
trading strategies or regulation.
“If you think about the amount of
resources these market participants
have,” he adds, “and how smart they
passive funds and ETFs have a
are, if it was profitable and easy to
mandate to track an index, what is
do, the low-hanging fruit would have
not written in the prospectus is the
been picked up by this point.”
way they have to track it.
Regardless of how many analysts say
there is nothing to fear from passives,
Stratified sampling
many people will stick with an active
“It would be rare they buy every stock manager, perhaps unable to shake
in an index, except in the case of say
the image of a driverless Uber killing
US large caps where all the stocks are
a cyclist. While this is your choice, it
large and have to be followed,” he says. is worth remembering a single factor
“If you are talking about small caps, was blamed for 93 per cent of US car
what is much more typical is the
accidents last year: human error.
portfolio managers weigh up the pros
and cons and say ‘what is the most
efficient way of tracking an index?’.
They won’t buy every stock in the
same way as not every stock is equally
liquid and their transaction costs
would be higher.”
Tarver says in most markets,
trackers follow indices using a
technique called stratified sampling
where rather than owning every share
they buy representatives of a sector.
“So, say you have a small-cap index
with some fairly illiquid stocks, you
might own a basket of these and put
an option against them to take out the
risk,” he explains.
“Although passive funds
and ETFs have a mandate to
track an index, what is not
written in the prospectus is
the way they have to track it”
THE BAILLIE GIFFORD
UK GROWTH FUND WAS
FORMERLY THE SCHRODER
UK GROWTH FUND
KEEPING WATCH FOR HIGH
GROWTH UK COMPANIES.
The Baillie Gifford UK Growth Fund PLC is an investment trust which
brings our long-term growth philosophy home to the UK.
As high conviction active managers we are looking for fi rms with sustainable
competitive positions and strong corporate cultures. Companies that we
believe can deliver superior earnings growth over many years.
This is a best ideas portfolio investing in what we consider to be the most
exciting businesses listed on the domestic stock market.
Please remember that changing stock market conditions will affect the value
of the investment in the fund and any income from it. Investors may not get
back the amount invested. If in doubt, please seek fi nancial advice.
If you’re looking for growth from a fl agship UK fund, call 0800 917 2112
or visit us at www.bgukgrowthfund.com
A Key Information Document is available by contacting us.
Long-term investment partners
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1 Greenside Row, Edinburgh, EH1 3AN, United Kingdom. Baillie Gifford & Co Limited is the authorised Alternative Investment Fund Manager and Company
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