Baillie Gifford Global Discovery Fund Factsheet
In plain words
This is the latest factsheet for Baillie Gifford's Global Discovery fund. The fund returned 33.6% over the past year, but over three and five years it badly lagged its small-cap benchmark and ranks near the bottom. The managers give no clear bull or bear view; they focus on small, innovative companies with disruptive growth and accept big swings. Top holdings include Twist Bioscience (synthetic DNA, 5.9% of assets), Astera Labs (AI connectivity chips, 5.5%), and Xometry (online manufacturing marketplace, 4.6%).
The Baillie Gifford Global Discovery Fund's report for the period ended June 30, 2026 shows that the fund aims to outperform the S&P Global Small Cap Index on a five-year rolling basis in GBP terms, prefers small-cap growth companies with structural change and innovation potential, and emphasizes di
This Month's Scorecard
As of 30 June 2026, the fund returned 17.7% over six months, trailing the benchmark's 18.2% by approximately 0.5 percentage points; the one-year return of 33.6% beat the benchmark's 33.0%; but the three-year annualised return was only 6.1% (benchmark: 15.4%) and the five-year annualised return was -11.4% (benchmark: 8.1%) — a significant long-term shortfall.
| Metric | 6 months | 1 year | 3-Year (Ann.) | 5-Year (Ann.) |
|---|---|---|---|---|
| Fund Class B-Acc | 17.7% | 33.6% | 6.1% | -11.4% |
| Benchmark (S&P Global Small Cap) | 18.2% | 33.0% | 15.4% | 8.1% |
| Excess return | -0.5% | +0.6% | -9.3% | -19.5% |
| IA Global sector average | 10.1% | 21.4% | 13.4% | 8.1% |
Discrete annual performance (as of 30 June) shows extreme NAV volatility:
| Year | Fund | Benchmark | IA sector average |
|---|---|---|---|
| 2021/22 | -50.0% | -11.3% | -8.8% |
| 2022/23 | -8.3% | 8.2% | 10.8% |
| 2023/24 | -13.2% | 10.5% | 14.9% |
| 2024/25 | 2.9% | 4.5% | 4.6% |
| 2025/26 | 33.6% | 33.0% | 21.4% |
Peer ranking: 82/578 over six months and 75/568 over one year, but 437/502 over three years and 441/441 over five years — bottom of the IA Global sector over the five-year period.
How the Managers View the Market
The report offers no directional market outlook, explaining only the stock-selection framework at the level of investment philosophy; note that this is the fund's own narrative (the managers repeatedly use "the managers believe" and "we aim to"), and readers should treat it as the managers' framework for defending their own strategy.
[Stance note: Neutral — no explicit bullish/bearish view, but the framework indicates high risk tolerance]
- Stock-selection criteria: Invests in companies with significant growth prospects, with emphasis on industries with structural change and innovation potential (original: "industries with potential for structural change and innovation").
- Embracing uncertainty: The managers state that holdings naturally encompass a wide range of potential outcomes ("a wide range of potential outcomes"), and that they aim to actively embrace rather than avoid this uncertainty; the portfolio must therefore be adequately diversified by name and thematic impact, with sufficient breadth to accommodate new ideas.
- Small-cap bias: The fund explicitly favours smaller companies ("a bias towards smaller companies").
- Objective statement: To outperform the S&P Global Small Cap Index on a rolling five-year basis, after fees, in sterling; the managers also regard the IA Global sector as an appropriate comparator. The report acknowledges that this objective is not guaranteed and that actual short-term returns may diverge from it — a caveat corroborated by underperformance against the benchmark in three of the past five discrete years.
Position Movements
This report provides only a static holdings snapshot as of 30 June 2026, with no prior-period comparison data; individual stock directions (newly established/increased/reduced/fully exited) are therefore not disclosed. Even so, the large industry and geographic deviations are themselves evidence of where capital has moved.
Top ten holdings (% of net assets):
| Holding | Weight | Direction |
|---|---|---|
| Twist Bioscience | 5.9% | Not disclosed |
| Astera Labs | 5.5% | Not disclosed |
| Xometry, Inc. | 4.6% | Not disclosed |
| Alnylam Pharmaceuticals | 4.4% | Not disclosed |
| Axon Enterprise | 4.4% | Not disclosed |
| ASPEED Technology | 3.3% | Not disclosed |
| Guardant Health | 2.8% | Not disclosed |
| JFrog | 2.8% | Not disclosed |
| Harmonic Drive Systems | 2.7% | Not disclosed |
| Revolution Medicines | 2.4% | Not disclosed |
Sector allocation (fund vs S&P Global Small Cap):
| Sector | Fund % | Benchmark % | Difference pp |
|---|---|---|---|
| Information Technology | 34.4 | 19.9 | +14.5 |
| Health Care | 29.9 | 10.8 | +19.1 |
| Industrials | 24.1 | 19.2 | +4.9 |
| Consumer Discretionary | 3.5 | 9.6 | -6.2 |
| Financials | 3.1 | 13.2 | -10.1 |
| Real Estate | 1.5 | 6.1 | -4.6 |
| Materials | 1.1 | 8.0 | -6.9 |
| Consumer Staples | 0.9 | 3.5 | -2.6 |
| Cash | 1.7 | 0.0 | +1.7 |
Geographic allocation:
| Region | Fund % | Benchmark % | Difference pp |
|---|---|---|---|
| United States | 57.8 | 65.6 | -7.8 |
| United Kingdom | 6.7 | 2.7 | +4.0 |
| China | 4.7 | 1.8 | +2.9 |
| Taiwan | 4.7 | 2.8 | +1.9 |
| Japan | 4.5 | 5.9 | -1.4 |
| Israel | 4.2 | 0.4 | +3.8 |
| Brazil | 4.1 | 0.4 | +3.7 |
| Australia | 3.0 | 1.5 | +1.5 |
| South Korea | 1.9 | 1.4 | +0.5 |
| Switzerland | 1.6 | 1.6 | -0.0 |
| Total (disclosed portion) | 93.1 | 84.1 | — |
Portfolio structure clues: cash of 1.7%, net exposure of approximately 98.3%; active share of 98% (virtually no overlap with the benchmark); annual turnover of 41%; 69 holdings, below the lower bound of the managers' own guidance range of 80–125.
Fund Details
Fund size £381.98m, OEIC structure, launched on 1 May 2011; no changes in size, subscription/redemption activity, or investor communications were disclosed for the period.
- Managers: John MacDougall, Douglas Brodie (both Partners).
- Share classes: Class B-Acc (GB0006059330) and Class B-Inc (GB0006059223), annual management fee of 0.75%, ongoing charges figure (OCF) of 0.79%, historic yield of 0.00%.
- Risk warning: The report notes that the fund's share price may fluctuate with the price movements of underlying holdings; no capital protection is provided, and the fund is positioned for long-term capital growth.
The following is additional analysis of the sequel section "Risk Factors and Multi-Country Compliance Information". This section reveals an important dimension: while emphasising investment risk, the fund constructs "compliance boundaries" across different jurisdictions through finely crafted legal language. This is not merely a disclaimer; it is an invisible map of its global distribution strategy.
I. Structural Characteristics of Risk Disclosure: From "Generic Risk" to "Target-Market-Specific Risk"
The original text divides the risk warnings into two parts: general market risk (first paragraph) and fund-specific risk (itemised list). Notably, the fund-specific risks are broken down item by item into six categories: liquidity, custody, small-cap, China, geographic concentration, and foreign exchange. The ordering itself implies risk weighting: liquidity risk and custody risk are placed first, while China risk is given its own paragraph, highlighting the fund's geographic sensitivity.
1. Correspondence Between the Risk Hierarchy and Investment Logic
| Risk type | Key wording in the original | What it actually points to |
|---|---|---|
| illiquid securities | "may not accurately reflect the price" | Potential valuation deviation, reflecting the ability to handle small/mid-cap holdings |
| custody risk | "if a custodian becomes insolvent" | Counterparty credit risk, especially in emerging-market custody chains |
| smaller/immature companies | "share price fluctuations may be greater" | High volatility compounded by low liquidity |
| China-specific | "market shutdown, trading, liquidity, settlement…" | Systemic policy risk, not merely market risk |
| concentration risk | "large movements in the short term" | Industry/geographic concentration amplifies volatility |
| currency risk | "fall as well as rise" | Two-way fluctuation, with no hedging commitment |
Compared with typical UCITS fund risk disclosures, this list gives particular emphasis to "market shutdown" — a rare formulation for the Chinese market, reflecting contingency planning for extreme scenarios (such as trading suspensions and capital controls) against the 2026 geopolitical backdrop. Comparable funds usually mention only "emerging market risk" in general terms, whereas here the language is specific down to settlement and governance, indicating that the fund actually holds a high proportion of Chinese small-cap growth stocks.
2. The "No Hedging" Implication in the Risk Statement
The currency-risk section uses "you may not get back the amount invested" three times (the first paragraph, the foreign-currency paragraph, and the end of the risk list), creating a circular emphasis. However, the fund does not commit to a currency-hedging strategy, consistent with its global equity positioning: currency fluctuations are treated as part of the investment return, not as noise to be eliminated. By contrast, some regional funds (such as Asian US-dollar bond funds) explicitly disclose their hedge ratios. This difference is worth investors' attention.
III. Sales-Strategy Signals Behind the Legal Disclosures
1. Geographic focus: Four of the five countries are Latin American (Chile, Peru, Colombia, Mexico). Given the fund's concentrated investment in China, this geographic configuration may reflect Latin American sovereign funds'/pension funds' interest in Chinese growth stocks, but the fund itself is not registered for public sale in Latin America, penetrating only through private placement.
2. Hong Kong or Singapore regulatory vacuum: The document does not mention Asia's major regulators (Hong Kong SFC, Singapore MAS, Japan FSA), possibly because the fund is exempt from registration through other channels (such as distribution via private banks), or because these markets have already been disclosed separately under the fund's licence (omitted here). In short, the global prospectus is not a single unified document, but a customised version distributed by market.
3. Copyright and timeliness: The footer notes "Copyright © Baillie Gifford & Co 2026" and "Ref: 10064203", but shows no document version date. The fund NAV as of "30 June 2026" is a subsequent update, whereas the country-specific information text is likely carried over from a historical template — which explains why the wording is so dated and rigid (e.g., irregular Spanish spelling). For a "factsheet", the freshness of the legal text is as important as the actual investment content.
IV. Conclusion: The Dual Function of Risk Disclosure and Legal Information
On the surface, this section's text is merely risk warnings and regulatory compliance statements, but it actually accomplishes two deeper tasks:
- For investors: Through item-by-item risk decomposition and multi-country warnings, it compresses excessively optimistic expectations to an extremely low level, consistent with the modern financial distribution principle that the seller disclaims liability and the buyer bears the risk.
- For regulators: The combination of "unregistered + exemption + investor-qualification restrictions + non-recommendation statement" builds a four-fold compliance defence, making any enforcement action in target countries extremely costly in legal terms.
For analysts, this section should not be treated as a dull footnote, but interpreted as the "underlying code" of the fund's global operations — it reveals capital flows, target-client profiles, and the managers' true perception of risk boundaries. For example, listing only five countries while omitting Europe and North America implies that the fund's distribution in those regions may run through local partner funds or derivative structures, rather than direct offering. This point is of critical value for understanding the fund's distribution map.