Baillie Gifford has closed Charlie Broughton’s £141m British Smaller Companies Fund, following a prolonged period of underperformance.
The fund, which was launched in 1993, aimed to outperform the Numis Smaller Companies Index (excluding investment companies) by at least 2% per year over rolling five-year time frames.
However, the fund’s total returns had “not met clients’ expectations over the long term”, according to Baillie Gifford, and was subsequently placed on watch in the firm’s Assessment of Value (AoV) report in August last year. Since then, the fund fell by more than £41m.
The vehicle officially wound up on 27 June, and all shareholders will receive full cash payments for their holdings within 30 days.
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Alongside poor performance, Baillie Gifford said the mandate was closed for “several reasons”.
“Investor demand for the sector and the fund itself has been weak for a number of years,” a spokesperson said. “Baillie Gifford has [also] increasingly adopted a global perspective to research around smaller companies.
“The manager Charlie Broughton remains a valuable member of the International Smaller Companies team.”
Over the last three years, the fund lost 4.8% in total return terms, compared to its benchmark’s total return of 11.4%, according to figures from Baillie Gifford’s website. It also fell by 19.2% over the last 12 months alone, while its benchmark lost 4.6%.
Its largest holdings included Burford Capital at 8.3%, Alpha FX at 6.6% and promotional products supplier 4imprint at 6.3%.
