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(Alliance News) - Baillie Gifford UK Growth Fund PLC on Tuesday reported a decrease in net asset value in its recent financial year, underperforming its benchmark.
At April 30, the fund's NAV per share stood at 203.1 pence compared to 207.5p the year before, a 2.1% decrease.
Baillie Gifford UK Growth's net assets also decreased 2.1% in the same period, slipping to GBP305.7 million from GBP312.3 million the prior year.
The fund declared a final dividend of 2.95p per share, giving a total dividend for the financial year ended April 30 of 4.45p - which is 26% below the 6.0p paid out in financial 2018.
The decrease in dividend coincides with the 22% decrease in net revenue per share, falling to 5.12p from 6.58p the year before.
Baillie Gifford UK Growth saw a NAV total return of 0.2% in the period, compared to its benchmark, the FTSE All Share index, returning 2.6%.
During the period, the fund switched investment manager from Schroder Unit Trust Ltd to Baillie Gifford & Co Ltd.
In the ten months to April 30 - the period under the new manager - the fund's total return was negative 0.2% compared to a flat return from the benchmark.
Following the move, the new investment manager re-positioned the fund in line with its new growth-stock policy. As a result, most of the fund's prior 49 holdings were sold and 42 new holdings were acquired. Baillie Gifford said the fund is "now positioned as desired".
The cost of restructuring was about 1% of NAV.
"Since the change of managers and the consequent reorganisation of the portfolio, market conditions have been difficult for the focused portfolio of good quality UK stocks now held," Chair Carolan Dobson said.
The fund's new investment manager added: "We took over the management of the company's assets in the end of June 2018 and have experienced significant performance volatility since. Whilst the final quarter of 2018 presented a very challenging backdrop for our growth approach, performance has rebounded strongly since the beginning of the year. We believe it is unwise to try to infer anything meaningful from such a short period and request that shareholders judge our efforts over similar time frames to the ones we apply to judge the progress of our underlying investments namely five years."
At the fund's upcoming annual general meeting, shareholders will have the opportunity to vote on the continuation of the fund. The fund's directors are proposing to continue Baillie Gifford UK Growth for another five years.
Dobson said: "Your directors are aware that performance over the past five years has been disappointing. Over the five years to April 2019, the company's NAV total return was 25.1% and the FTSE All Share index total return was 35.2%.
"It is still too early to comment on the longer-term performance of the new portfolio managers. However, having conducted a thorough review of the managers' approach and resources we believe Baillie Gifford has the right team to manage a portfolio comprising judiciously selected investments with good long-term growth prospects."
Looking forward, the investment manager added: "Political developments, whether Brexit or the prospects for US/China trade, have been a key factor for equity markets during the past year. We simply do not have a crystal ball and therefore cannot claim to have any expertise in forecasting political outcomes. What we do know is the recent operational progress of the portfolio's holdings has generally been encouraging despite the apparent doom and gloom espoused by the media."
Shares in Baillie Gifford UK Growth in London were up 0.5% Tuesday at 186.98 pence each.