there are two concerns, firstly there has been a long period of underperformance and we don’t know if this will correct and secondly Mick will be retiring at the end of April and although he has worked with the same team for some time we don’t know what the changes will mean for the ongoing performance.
The US market is notoriously difficult for active managers to outperform; the argument is that it is highly efficient and therefore investors would be better to hold a fund that tracks the index rather than paying for active management.
We test all our funds against the index and although over short periods funds may underperform our aim is to identify managers who consistently add value. The Baillie Gifford American Fund had a good track record when we added it to the portfolio two years ago however its style of investing (quality growth stocks) has meant that it is starting to lag.
In this review we wanted to try and identify whether investors should be patient or whether this is a trend which might not reverse.