Baillie Gifford, the partner-owned manager headquartered in Edinburgh, has launched the Cautious Managed fund, a reflection of its existing Managed fund but that aims for lower volatility from the portfolio through greater exposure to fixed income.
The new fund uses a benchmark that is 50% equities, 45% bonds, 5% cash, and sits in the Investment Association Mixed Investment 20-60% sector.
By contrast, the Managed fund – which sits in the IA Mixed Investment 40-85% sector – holds 75% equities, 20% bonds, 5% cash. That fund has provided annualised return of 8.5% since launch 38 years ago, Baillie Gifford states.
The Cautious Managed fund is managed by the manager’s head of UK Equities Iain McCombie and head of Income Research Steven Hay.
Hay commented that clients had fed back that they were interested in a similar strategy but with lower volatility. However, the long term objectives of the strategy overall are still in place. Despite near term ‘noise’ from markets – such as in reactions to geopolitical events – the fundamentals currently look benign, for example, with the rates cycle direction in many key markets indicating continued support for corporate earnings and cheaper refinancing as rates are trimmed.
Investment themes such as AI continue to play out and for a manager looking for structural stories, this will remain in focus, he added. Awareness of reasons to diversify away from the US is another, following a longer period in which US ‘exceptionalism’ did well for investors; now there are reasons to look at other markets.
James Budden, head of Global Marketing, commented: “Our new Cautious Managed fund compliments the well-known Baillie Gifford Managed fund which has been in existence for nearly 40 years. Our research has convinced us that there is demand for a less volatile managed option. It is the same team at the helm and the same successful process still offering the best of Baillie Gifford’s equity and bond ideas but blended differently. Another difference is the fee being 0.28% versus 0.40% during the initial period.”
Baillie Gifford stated it is offering “a 30% saving on B shares for the first three years before normalising to a 0.4% annual management charge – same as Managed fund.”
