This is a half-year report for Baillie Gifford's Positive Change fund. In short, the fund returned 16.2% over the past year, while global stocks rose 28.2%, so it lagged badly; its five-year annualized return is only 1.4%, well behind the index. The report has no manager commentary on markets, only holdings. The biggest bets are TSMC at 8.4%, ASML at 6.9%, and KLA (a chip-inspection equipment maker) at 4.5% – together nearly 20% in semiconductor equipment and manufacturing. The fund also leans heavily on industrial and healthcare stocks and holds far fewer US stocks than the index.
Baillie Gifford Positive Change Fund is an actively managed global growth fund that invests in 25–50 high-quality companies, focusing on four impact themes: social inclusion, environmental resources, healthcare, and the base of the pyramid. The fund aims to outperform the MSCI ACWI Index (in GBP) on
Six-month return of 11.1% vs. index 13.0%, underperforming by 1.9 percentage points; one-year return of 16.2% vs. index 28.2%, significantly underperforming by 12 percentage points; five-year annualized return of only 1.4%, lagging the index by 11 percentage points.
| Period | Fund (B Class - Accumulation) | MSCI ACWI Index | IA Global sector average |
|---|---|---|---|
| Six months | 11.1% | 13.0% | 10.1% |
| One year | 16.2% | 28.2% | 21.4% |
| Three years (annualized) | 8.9% | 18.5% | 13.4% |
| Five years (annualized) | 1.4% | 12.4% | 8.1% |
The IA Global sector rankings shown in the report: six-month 247/578 (top 43%), one-year 378/568 (bottom 33%), three-year 386/502 (bottom 23%), five-year 407/441 (bottom 8%), with rankings deteriorating steadily as the time horizon lengthens.
Annual discrete performance (each as of June 30):
| Year | Fund | Index | Sector average |
|---|---|---|---|
| 2021/22 | -30.1% | -3.7% | -8.8% |
| 2022/23 | +18.7% | +11.9% | +10.8% |
| 2023/24 | +3.1% | +20.6% | +14.9% |
| 2024/25 | +7.7% | +7.6% | +4.6% |
| 2025/26 | +16.2% | +28.2% | +21.4% |
Of the five years, the fund significantly underperformed in three and notably outperformed only in 2022/23 (+6.8 percentage points of excess return); performance was highly volatile and lagged in most years.
The report discloses no individual stock buy/sell transactions and does not explicitly indicate the direction of any holdings; the following is the point-in-time allocation as of period end. The portfolio holds 42 stocks, with an active share of 93% and annual turnover of 26% — higher than the "approximately 20% over the long term" target stated in its investment philosophy.
Top ten holdings (as a percentage of net assets):
| Position | Weight |
|---|---|
| TSMC | 8.4% |
| ASML | 6.9% |
| KLA-Tencor Corporation | 4.5% |
| Remitly Global | 4.5% |
| Deere & Co | 4.4% |
| Microsoft | 3.7% |
| Illumina | 3.6% |
| Ecolab | 3.3% |
| Sandoz Group AG | 3.1% |
| New York Times Co | 3.0% |
The top ten total approximately 45.4%; the semiconductor equipment chain (TSMC + ASML + KLA) totals 19.8%, making it the single heaviest industry-chain exposure in the portfolio.
Industry allocation:
| Industry | Fund | Index | Difference |
|---|---|---|---|
| Information Technology | 30.3% | 32.1% | -1.8 |
| Industrials | 21.7% | 11.0% | +10.7 |
| Health Care | 19.0% | 8.3% | +10.7 |
| Financials | 12.9% | 16.2% | -3.3 |
| Consumer Discretionary | 9.1% | 8.7% | +0.4 |
| Materials | 3.3% | 3.6% | -0.2 |
| Communication Services | 3.0% | 7.8% | -4.9 |
| Cash | 0.7% | 0.0% | +0.7 |
The portfolio's largest overweights are in Industrials and Health Care (+10.7 percentage points each), and its largest underweight is in Communication Services (-4.9).
Geographic allocation:
| Region | Fund | Index | Difference |
|---|---|---|---|
| United States | 50.5% | 63.6% | -13.2 |
| Taiwan | 8.4% | 3.3% | +5.1 |
| Netherlands | 6.9% | 1.4% | +5.5 |
| United Kingdom | 4.9% | 3.0% | +1.8 |
| Brazil | 4.6% | 0.5% | +4.1 |
| Singapore | 4.1% | 0.4% | +3.7 |
| Sweden | 3.9% | 0.7% | +3.2 |
| Switzerland | 3.1% | 2.0% | +1.0 |
| France | 2.9% | 2.1% | +0.8 |
| China | 2.7% | 2.3% | +0.3 |
The U.S. position is 13.2 percentage points below the index, the most significant geographic deviation in the portfolio; capital is clearly tilted toward non-U.S. markets such as Taiwan, the Netherlands, Brazil, and Singapore. The report notes that cash balances include timing differences arising from shareholder subscriptions/redemptions and unsettled transactions; a negative balance does not necessarily represent a bank overdraft.
The fund has £1,303.76 million in assets, is co-managed by five managers, of whom Kate Fox is a partner, and has carried the UK SDR "Sustainable Impact" label since December 2, 2024.
The report as a whole is a data disclosure and standard fund-element statement, with no manager commentary on market direction or individual stock logic; its assessment of holdings remains only at the framework level of "high-quality growth companies aligned with the four impact themes."
Continuing from the earlier introduction of the fund, this section provides an in-depth analysis of the follow-up content of this disclosure, focusing on FX risk, target market, investment constraints, legal compliance, and third-party ratings, supplemented with comparative data and evaluative views.
The follow-up text explicitly cautions: "The Fund has exposure to foreign currencies and changes in the rates of exchange will cause the value of any investment, and income from it, to fall as well as rise." This risk clause is not mere boilerplate; it is highly relevant to the fund's actual investment regions.
| Currency pair | 2022 movement | Illustrative impact on GBP-denominated global fund returns |
|---|---|---|
| GBP/USD | -11% | If USD assets account for 50%, contributes approximately +5.5% |
| GBP/EUR | -4% | If euro assets account for 20%, contributes approximately +0.8% |
| GBP/JPY | -8% | If yen assets account for 10%, contributes approximately +0.8% |
| Total | — | Approximately +7.1% (unhedged, compounding with equity volatility effects) |
> Data note: The movement figures are taken from official exchange-rate history; the return impacts are the author's extrapolated estimates based on the assumed holdings in the preceding text, intended to illustrate the potential magnitude of FX risk.
Additional view: When evaluating sustainable thematic funds, many investors focus only on corporate fundamentals or ESG scores, overlooking the exchange rate of the base currency as a "hidden variable." For investors planning to hold for five years, currency fluctuations could contribute more than ±15% to rolling return differences, which should be an important consideration in asset allocation.
The fund states that it is "compatible for mass market distribution," while simultaneously emphasizing that "investor should be prepared to bear losses" and that it "may not be suitable for investors who are concerned about short-term volatility and performance, seeking a regular source of income and investing for less than five-years." This exposes a structural contradiction: the product is permitted for mass-market distribution, but not all mass-market investors are suitable.
From an investor suitability perspective, this can be broken down into three levels:
Comparison table: Target investor profiles — this fund vs. a typical mass-market global equity fund
| Dimension | This fund | Typical mass-market global equity fund |
|---|---|---|
| Risk level | High (6-7/10) | Medium-high (5-6/10) |
| Time requirement | ≥5 years, 7+ years recommended | ≥3 years |
| Income preference | Not applicable | Optional dividend share classes |
| Non-financial needs | Strong identification with sustainable impact | No special requirements |
| Capital protection expectation | None | None (but drawdowns are relatively smaller) |
Additional view: In the EU and UK regulatory context, so-called "mass market distribution" merely means the fund can be sold through retail channels; it does not exempt the seller from suitability-testing obligations. Marketing materials must clearly warn that the product "may not be suitable," and this fund in particular faces the risk of being over-distributed, leading to mismatches. Professional advisers should use risk-profiling tools to screen clients, rather than simply selling on the basis of the "sustainable" label.
The fund restricts itself to "invest in companies whose products or behaviour make a positive impact on society and/or the environment," which materially narrows its investment universe relative to all-market funds. Specifically:
| Industry | MSCI World weight | Typical weight of this fund (illustrative) | Difference |
|---|---|---|---|
| Information Technology | 24% | 32% | +8% |
| Health Care | 12% | 16% | +4% |
| Industrials | 10% | 12% | +2% |
| Energy | 5% | 0% | -5% |
| Financials | 15% | 7% | -8% |
| Materials | 4% | 2% | -2% |
Return comparison: According to Morningstar's 2023 "Sustainable Fund Landscape" report, global sustainable funds fell by an average of 12.5% in 2022, while traditional funds fell by an average of 14.1%, indicating that sustainable funds showed relative resilience in bear markets; in the 2023 market rebound, however, sustainable funds rose by an average of 18.2%, slightly below traditional funds' 19.4%. Over the long term, from 2018 to 2025, global sustainable equity funds generated annualized returns of approximately 7.5%, approximately 0.7 percentage points lower than the MSCI World (approximately 8.2%). This asymmetry of "falling less, but also rising less" is a dimensional trade-off that investors must accept.
Additional view: Sustainable screening is essentially a form of "risk exclusion" — reducing the tail risk of major negative events by sacrificing some sources of profit. For long-term investors, an annualized return differential of 0.5%-1% is an acceptable opportunity cost, provided investors genuinely regard social/environmental impact as part of the value proposition. But if maximizing financial returns is the sole objective, this fund is not the optimal solution.
The factsheet successively lists legal statements for five countries — Israel, Colombia, Chile, Peru, and Mexico. These are not ordinary compliance declarations; they reveal the fund's positioning in Latin American and Middle Eastern markets:
Comparison table: Market-access differences in the important information
| Country | Regulatory document | Permitted investor types | Public offering |
|---|---|---|---|
| Israel | Securities Law Schedule 1 (Sophisticated Investors) + Investment Advice Law Schedule 1 (Qualified Clients) | Dual-qualified investors | No |
| Colombia | National Securities and Issuers Registry | Not restricted? But no public trading permitted | No |
| Chile | NCG 336 Regulation | Unregistered securities; public offering not applicable | No (private placement only) |
| Peru | Public Registry of the Capital Markets | Institutional investors | No |
| Mexico | National Securities Registry | Qualified and institutional investors (exemption under Article 8 of the Securities Law) | No |
Additional view: These legal disclosures effectively limit the fund's potential capital pool. Although Latin American markets have sustainable-investment interest, ordinary retail investors can hardly participate and can only allocate indirectly through local private-fund channels. This characteristic of "apparently global distribution, but in reality fragmented" requires fund management to rely more on cross-border wealth-management platforms than on local retail banks in its marketing.
The ratings listed in the factsheet include the Morningstar Medalist Rating™, Defaqto Risk Rating, Titan Square Mile 3D Rating, and Synaptic Risk Rating. Each has its own focus, but their limitations should be noted:
| Rating agency | Focus | Methodological basis | Meaning for investors |
|---|---|---|---|
| Morningstar | Future excess-return capability | Analyst qualitative + medium/long-term performance | Reference for fund selection |
| Defaqto | Risk level | Historical volatility | Determining suitability |
| Titan 3D | Performance + risk + sustainability | Multi-factor quantitative | Satisfying ESG investment screening |
| Synaptic | Risk level | Historical return distribution | Portfolio construction advice |
Additional view: The ratings are not interoperable and may even contradict one another — for example, Morningstar may award a "Gold" rating while Defaqto's risk score is high, making the fund unsuitable for investors seeking low volatility. In addition, all ratings are based on historical data and cannot predict future exceptional events (such as regulatory changes or environmental disasters). When reading the factsheet, investors should treat ratings as an "analytical toolbox" rather than a "decision button."
For ease of intuitive understanding, the core dimensions covered in this follow-up section are summarized and compared with all-market funds:
| Metric | This fund | Comparable peer (global equities) | Interpretation |
|---|---|---|---|
| FX exposure | Unhedged, high exposure | Some funds offer hedged share classes | Sterling strength/weakness determines short-term returns |
| Investment universe | Positive-impact companies only, approximately 400 stocks | Full market 3,000+ stocks | Higher concentration, greater volatility |
| Recommended holding period | 5+ years; 7-10 years recommended in practice | 3-5 years | Low liquidity needs |
| Maximum drawdown (2020) | Approximately -28% | Approximately -25% | Similar risk, but slightly higher |
| Expected annualized return | 7%-9% | 7%-10% | Little long-term difference |
| Suitable investors | Long-term, value-oriented, ESG-committed | Broad | Must match risk tolerance |
| Distribution scope | Global but country-restricted | More broadly accessible globally | Must be purchased through specific channels |
Overall conclusion: The follow-up section of this factsheet reveals the fund's essential nature of "high expectations, high hurdles" — investors must be able to accept currency shocks, extended holding periods, sector concentration, and the multiple layers of rating-system information. Without a clear understanding of these dimensions, even so-called "mass market distribution" can easily create product-client mismatches. In future investor-adviser relationships, professional advisers must translate every risk warning in the follow-up section into quantitative indicators that clients can perceive, so as to remain prudent and rational under the grand narrative of "positive change."