(Alliance News) - Baillie Gifford UK Growth Fund PLC on Friday said its net asset value total return for its financial year was below its benchmark after a "very challenging" fourth quarter.
NAV per share as at April 30 fell to 203.1 pence from 207.5p year-on-year. The NAV total return for the year ended April 30, which is adjusted for dividends and share price, was 0.2%, while the FTSE All Share index returned 2.6%.
Baillie Gifford UK Growth Fund was managed by Schroder Unit Trusts Ltd for the first two months of its financial year, and then by Baillie Gifford & Co Ltd. As such, the portfolio was then reorganised to align "with the new managers' growth investment philosophy".
Almost all of its prior 49 holdings were sold and the company purchased 42 new holdings at a cost equivalent to 1% of its NAV.
"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," said Baillie Gifford.
"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."
The company has recommended a final dividend of 2.95p per share, taking the total for the year to 4.45p from 6.00p the year prior. Baillie Gifford UK Growth Fund is undertaking a "stepped reduction in dividend payments" to align with its new investment manager.
Chair Carolan Dobson said: "The board and managers have considered the implications of Brexit and the current political uncertainties. As of the date of this statement, there are so many uncertainties that there seems little that could be done to hedge the portfolio against such a wide range of potential negative outcomes other than our portfolio managers remaining focused on backing exceptional UK companies that have the potential to exploit their competitive advantage.
"Whilst the benefits of this approach will not always be reflected in short term returns, the board and Managers firmly believe it will reward the patient investor over the long-term."
Shares in Baillie Gifford UK Growth Fund closed down 0.8% at 189.00 pence on Friday.
Baillie Gifford (BGUK)