Fund of the Month July

The latest fund tip, hand-picked by our Investment Guidance team.

Article updated: 6 July 2020 9:00am Author: Lucinda Gregory

Our Fund of the Month for July is Baillie Gifford Positive Change (accumulation)(income)

Sustainable funds have come into their own during the pandemic, outperforming conventional funds in the first quarter of 2020, proving investing does not have to be a choice between performance and your principles.

Considering Environmental, Social and Governance (ESG) factors as part of your core risk considerations simply makes good business sense – with companies who tick these boxes far more likely to be sustainable.

As economies recover from the crisis many believe investing for positive change will be more important and powerful than ever, enabling us to ‘build, back, better’.

Reasons to buy

  • This fund’s overarching objective is to deliver positive change by contributing to a more sustainable and inclusive world while delivering attractive investment returns.
  • Delivering outstanding risk-adjusted returns, this first quartile positioned fund has outperformed the IA Global sector by a considerable margin since its launch 3 years ago.
  • The portfolio provides exposure to some of the structural trends of the future including digital innovation and energy transition.
  • The team provide a vast array of content for investors including annual an Impact report, a ‘Positive Conversations’ report containing data of voting and engagement and an impact calculator for customers to see the benefit of their investment.

Things to be wary of

  • Investors should be aware this fund has a higher volatility compared to that of its peers.
  • The fund was launched in 2017 therefore only has a relatively short track record of 3 years.
  • The fund is predominantly growth-orientated so may not be suitable for an investor seeking income.

About the fund

This concentrated global equity fund has two main objectives; to deliver positive change by contributing to a more sustainable and inclusive world while delivering attractive investment returns.

The manager Kate Fox believes capital that is thoughtfully and responsibly deployed is a powerful mechanism for change and that purpose complements profits in the long term.

Kate and her team focus on high quality, long-term growth businesses with strong fundamentals (strong balance sheets, solid management etc) that deliver positive societal change in one or more of four areas:

  • Social Inclusion and Education,
  • Environment and Resource Needs,
  • Healthcare and Quality of Life, and
  • Base of the Pyramid (addressing the needs of the world's poorest populations).

These four themes are intentionally broad and aim to capture a wide range of challenges our society is facing, both social and environmental in nature.

Once ideas have been sourced the independent process involves an impact analysis conducted by the Governance and Sustainability analysts. The team adopt a proactive and positive approach by investing in companies who provide solutions to global challenges rather than simply screening out those that do harm.

An abundance of information can be found on Baillie Gifford’s website including an annual impact report, a ‘Positive Conversations’ report containing data of voting and engagement and an impact calculator. All of these allow customers to see the benefit their investment has on the world.

Portfolio positioning and performance

The manager runs a highly concentrated portfolio of around 30 names that are very different to the index (MSCI AC World Index). This is a high conviction fund so investors should experience low portfolio turnover over the long term.

The fund is predominantly growth orientated with companies found in the portfolio providing solutions to global challenges and therefore future growth opportunities. Investors should therefore note that this fund may not be suitable for those seeking income.
The team believe that the current uncertain times could hasten structural trends that had already been foreseen in the world, with wider technology adoption already accelerating and the world’s major environmental and social challenges at the forefront of government and consumer agendas.

The portfolio provides exposure to some of these trends of the future including digital innovation, healthcare and energy transition. Holdings include Tesla, Illumina, Kingspan and Orsted.

Recently celebrating its three year anniversary the fund has delivered outstanding risk-adjusted returns, out-performing the IA Global sector by a considerable margin since its launch. It should be noted that this out-performance is against not only its responsible peers but also against conventional funds in the sector. Investors should however bear in mind that this fund has a higher volatility than its peers meaning returns may fluctuate to a greater degree.

Risk rating: M5


All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.

Lucinda Gregory portrait photo
Lucinda Gregory

Investment Research & Guidance Manager

Lucinda has significant experience working in the fund management industry having previously worked at J.P. Morgan. She currently manages our team of analysts who are leading the company’s sell-side proposition and are responsible for our range of preferred lists.

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