The board announced that it plans to broaden the investment policy to allow managers to invest principally in smaller and less mature companies (typically with a market cap of less than $5bn). Portfolio responsibility would pass to Douglas Brodie with John MacDougall as his deputy. This would see Mark Urquhart, who has managed the fund since 2003, step aside.
The move does not appear to be performance-related. The trust is second out of 35 funds in the Global Growth sector over one year, having risen 35.1% against a sector average of 19.9%. Over five years, the trust has risen 193.7%, compared to a sector average of 101.7%.
Chairman David Reid said the reasons for the change of strategy were related to the discount and liquidity: "Despite this performance, the Company's discount has been in double digits for most of the year. Liquidity in the Company's shares has been suboptimal in comparison to alternative offerings, with only sporadic periods of notable trading activity. Disappointingly, this has been the pattern over recent years. These points are of concern to your Board and Managers as they dissuade current and potential shareholders from investing." The £238m trust remains on a 9.8% discount to NAV.
Reid said the board had concluded that the lack of differentiation was potentially contributing to the decline in liquidity of the Company's shares and in greater discount volatility. He added that the new strategy would be "an extension of that used at present although focusing on taking a stake in companies at an earlier stage in their growth cycle".
Brodie has recently given up management of the Baillie Gifford British Smaller Companies fund on which he had built a strong long-term track record. The fund remains top quartile over one and three years. He also runs the Baillie Gifford Global Discovery fund, launched in 2011, which is currently top of the global sector over one and three years.