Unquoteds stay high as Baillie Gifford trust struggles

BG US Growth Trust fully exited Peloton and Teladoc at a £9m loss


Baillie Gifford US Growth Trust endured another difficult period in the six months to 30 November 2022, as its share price and NAV fell 4.6% and 2.1%, respectively, each considerably undershooting the 5.4% returned by the S&P 500 index.

As a percentage of total assets, the trust’s unlisted holdings remained high, having more than doubled to 36.4% in the year to 31 May 2022, something for which its sister trust Scottish Mortgage has received criticism.

By the end of November, the US growth trust’s 24 private-company holdings made up 35.6% of total assets, with SpaceX and fintech Stripe being the first and third largest portfolio holdings, respectively.

Though the trust’s unlisted assets remain high, although still some way off the upper limit of 50% of the portfolio.

The remainder of the top five holdings, Moderna, advertising company The Trade Desk, and Tesla, had mixed fortunes across the period. The report was keen to highlight the success of its £32m holding in the pharmaceutical firm, which saw its share price grow 21% across the six months, but could spare no comments on the others, which returned -6% and -23%, respectively.

According to the trust’s December factsheet, its holding in Tesla shrunk considerably over the last year, with the stake comprising 2.9% of the portfolio as of the end of 2022, down from 4.9% on 31 May 2022.

Managers Gary Robinson and Kirsty Gibson (pictured) generated relatively low portfolio turnover during the half, enacting only two purchases—online gaming platform Roblox and restaurant chain Sweetgreen—and two complete sell offs, Peloton and telemedicine company Teladoc. The trust made a loss of £9m on those sales.

In all, the company lost £12.7m after tax during the six months, compared to a gain of £155.8m in the equivalent period last year. Net assets dipped to £572m from £584m during the period, and as of 31 December had fallen further still – to £570m.

By the end of the six months, NAV per share sat at 188p, while share price was 160p. Since that date, these values have slipped to 175p and 150p, respectively, leaving the trust trading at a discount of nearly 16%.

In the report, the trust said it was grateful for the patience of its shareholders off the back of a weak performance. It added that while the short-term outlook remained unclear, amid heightened geopolitical and economic uncertainty, the company remained focused on trying to identify and own the exceptional growth companies in America.

“[These] companies address large market opportunities, and it is their ability to capture these opportunities, rather than economic cycles, which will be the primary determinant of long-term outcomes.”

The trust fell out of the FTSE 250 in June 2022 following a harrowing financial year in which its share price returned -45.5% and its NAV generated -35.3%. The numbers look considerably gloomier when compared to the S&P 500, which delivered a positive return of 12.2% across the same timeframe.

Across that year, the trust lost a staggering £364m on the value of its investments.

Since inception on 23 March 2018 to the 31 November 2022, share price has increased by 59.4%, while NAV has jumped 91.5%, yet the S&P 500 index has more than doubled in the same timeframe.

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