(Alliance News) - Baillie Gifford UK Growth Fund PLC said Thursday it trailed behind its benchmark in the first half of its financial year, having made few changes to its portfolio.
For the six months ended October 31, the UK equities investor posted a 3.6% decline in net asset value per share total return, versus a 0.4% increase in the FTSE All-Share Index.
During the period the firm initiated one new position, Farfetch, which is an online apparel retailer. Farfetch is currently loss making and its interim results - released during the period - were not taken well by the market and included a reduction in growth guidance. The fund also completed the sale of Jupiter Fund Management.
"It might be tempting to argue that our inactivity has not served shareholders well since our performance during this period lagged the benchmark. Nobody likes underperforming, but we fundamentally believe that to generate attractive long-term returns in excess of the benchmark, one has to accept short-term volatility against it. We do not pretend that we have the ability to outperform every period in a smooth manner and we would question the wisdom of even trying to do so," said manager Baillie Gifford & Co.
No interim dividend will be declared and Baillie Gifford UK Growth Fund has opted to declare all future dividends as a single final dividend.
Chair Carolan Dobson said: "At the time of writing the macro backdrop continues to be opaque. The UK has not left the European Union and the result of December's General Election is far from obvious. The risks of a disorderly Brexit remain high and continue to weigh over those companies with material exposure to the domestic UK economy; the portfolio does not have notable exposure to those companies most sensitive to the UK economy and contains exceptional UK companies which can grow over many years.
"Whilst the benefits of this approach might not always be reflected in short-term shareholder returns, the board and managers firmly believe it provides a repeatable basis for adding value for long term investors."
Shares in Baillie Gifford UK Growth Fund were down 0.4% at 184.22 pence in London on Thursday afternoon.
By Anna Farley; annafarley@alliancenews.com
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Baillie Gifford (BGUK)