Baillie Gifford trust refocuses for volatile period – Daily Business

Joe Faraday: a sturdier starting point

Baillie Gifford European Growth Trust’s new portfolio manager has repositioned its investments in response to global conflicts and their impact on energy prices and economic growth.

Joe Faraday, who was installed at the beginning of April, said that the adjustments “cannot, amount to a promise of a smooth performance recovery.

“It does, however, leave the period with a sturdier starting point. The portfolio retains its growth credentials but is better positioned to navigate volatility rather than endure it.

“If market confidence improves, there remains meaningful upside. If the external backdrop stays unsettled, there is more resilience than before.”

In his statement with the half-year results, he adds: “The past six months have been tough. The right response to a difficult period is not to become theatrical about the macro, nor to pretend that a setback is automatically self-correcting. It is to take decisive action where the evidence is clear. That is what has been done.”

The portfolio is now built around a far broader range of growth types and earnings drivers focused on structural rearmament in defence, telecoms, financials, and energy. Newcomers include the insurer and asset manager Allianz and reinsurer Swiss Re. Others are Deutsche Telekom, Airbus, TotalEnergies and the “well-run utility” Iberdrola, owner of ScottishPower.

There had been underperformance in the portfolio due to the limited exposure to high-performing sectors such as banks, insurers, utilities, and energy, “which dragged down relative performance throughout the period, particularly in March when the oil and gas shock hit”.

Faraday, who replaced Stephen Paice and Chris Davies, notes that in “an increasingly AI-driven world”, stocks such as Topicus, Prosus and Adyen all fell by around a third. Hypoport, Allegro and Reply were also heavily marked down.

These saw sizeable valuation de-ratings on the back of AI threat concerns, though operational progress and earnings growth have remained broadly encouraging.

“There were genuine positives, even if they were not large enough to compensate,” he says, noting that semiconductor equipment was the “clearest bright spot”.

ASML and ASM International both performed strongly. Among other holdings, healthcare businesses Roche and Sandoz, logistics supply chain business DSV, and mining equipment provider Epiroc all performed well.

Among the private holdings, Bending Spoons has continued to deliver strong operational progress and M&A, with an IPO now expected this year.

At 31 March 2026 the trust had total assets of £340 million. The net asset value per share total return over the six months was down 9.2% compared to a total return of 4.4% for the FTSE Europe ex UK Index, in sterling terms.

The share price total return over the period was down 8.8%, and the discount to NAV narrowed modestly from 8.6% to 8.2%.

The board said it will continue to use its share buyback programme to support the imbalance between supply and demand and to assist in the management of the company’s discount.

FTSE 250 entrant

Baillie Gifford’s Schiehallion Fund team rang the closing bell at the London Stock Exchange – marking the move to the main market and entry into the FTSE 250.

Schiehallion aims to give investors long-term access to some of the world’s most exciting private companies like SpaceX, Anthropic and Bending Spoons – businesses with the potential to transform their industries before they go public.

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