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80.5% of Baillie Gifford’s 41 analysed funds underperformed their sector averages over 1, 3, and 5 years, with none achieving a top 4 or 5-star rating.
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Performance has been impacted by the firm’s heavy exposure to growth stocks, particularly in US tech and Chinese markets, which struggled amid rising rates and shifting sentiment.
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Funds such as Baillie Gifford American and Long Term Global Growth have shown strong recent rebounds, outperforming peers over the past one to three years.
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Scottish Mortgage delivered the best one-year return among Baillie Gifford’s largest funds, supported by a tech sector recovery and a £1 billion share buyback.
Baillie Gifford has long been one of the most recognisable names in UK fund management. Known for its high-conviction, growth-oriented investment philosophy, the Edinburgh-based firm has built a reputation for backing disruptive companies and emerging global leaders. But after a decade of outperformance, recent years have proven more difficult.
As of March 2025, Baillie Gifford manages £197 billion in assets – a sharp drop from the £225 billion reported in 2024. This decline reflects both performance pressures and investor withdrawals, driven by a prolonged period of underperformance across much of its fund range. The core challenge has been the firm’s commitment to growth stocks, which have struggled in the face of rising interest rates, inflationary pressures, and a broader market shift towards value and defensive assets.
From 2010 to 2020, Baillie Gifford’s strategy delivered impressive results, with funds such as Scottish Mortgage and Positive Change achieving top-tier sector rankings. However, since 2021, that momentum has reversed, and several of its flagship funds have slipped to the bottom quartile of their sectors. Despite this, the firm has remained committed to its long-term view – a stance that began to show signs of renewed traction in 2023 as growth markets stabilised and investor sentiment began to shift once more.
In this review, we assess five of the firm’s largest and most widely held funds, analysing how they’ve performed over 1, 3, and 5-year periods. We look at where each fund stands today, how they’ve weathered recent volatility, and whether they are on track to regain their former strength.
Baillie Gifford Fund Performance Summary
Our analysis of 41 Baillie Gifford funds across 1, 3, and 5-year periods shows a clear trend of underperformance. 80.5% of their funds ranked below their sector average, and none achieved a top-performing 4 or 5-star rating. This marks a sharp contrast to the firm’s historic track record and highlights the sustained challenges facing its growth-focused strategies.
5 Largest Baillie Gifford Funds
Most of Baillie Gifford’s funds saw steep declines in value after the 2022 market downturn. This led to weaker cumulative performance over the past five years, which has affected their overall ratings.
However, many of these funds have started to show signs of recovery. The table below highlights five of Baillie Gifford’s largest funds, some of which are showing encouraging potential for future growth.
Baillie Gifford American Fund
The Baillie Gifford American B Acc fund is a high-conviction, growth-focused strategy that targets long-term outperformance of the S&P 500 (in sterling terms) by at least 1.5% per year over rolling five-year periods. It invests more than 90% of its assets in US companies, with a preference for innovative, high-growth businesses across all sectors and market sizes.
Classified within the IA North America sector, it currently manages around £3 billion in assets. Its performance has been mixed over the years. Over the past five years, the fund delivered a 26.72% return, significantly lagging the sector average of 75.27%.
This underperformance was driven by its high exposure to growth stocks, which fell sharply as interest rates rose in 2021–2022. Its concentrated portfolio amplified these losses. Tech-heavy holdings were particularly affected as investors shifted from growth to value stocks. Broader market volatility, geopolitical tensions, and the lingering impacts of the COVID-19 pandemic also weighed on performance during this period.
However, the fund is now showing strong signs of recovery and ranks among the best-performing Baillie Gifford funds in recent periods. Over the last three years, it achieved a return of 66.14%, well above the sector average of 37.54%. Its one-year performance has also been notable, delivering a 22.07% return and ranking 6th out of 227 peers.
This rebound has been fuelled by solid results from key holdings such as NVIDIA, Meta, and Amazon. The fund has also benefited from the broader recovery in U.S. growth and tech sectors. This improvement followed as inflation eased and interest rates stabilised. Its long-term strategy and proactive management have helped it navigate past market challenges. With renewed investor confidence, the fund now appears well positioned for future growth.
Baillie Gifford Global Alpha Growth
The Baillie Gifford Global Alpha Growth B Acc fund aims to deliver long-term growth by investing in a mix of global companies across different sectors. Its target is to outperform the MSCI ACWI Index by 2% per year over rolling five-year periods. The fund typically holds more than 90% of its assets in equities, with a focus on innovative businesses that it believes can grow significantly over time.
In recent years, the fund has faced challenges. It has a strong bias towards growth stocks, particularly in the technology sector, which have underperformed since 2021 due to rising interest rates and weaker investor sentiment. Over the past five years, the fund returned 33.41%, which is well below the sector average of 55.56%.
However, the fund has started to recover. Over the past three years, it delivered a return of 30.54%, just ahead of the sector average of 29.93%. Its one-year return of 4.57% also outperformed the sector average of 3.71%, placing it in the top half of its peer group.
Now managing around £1.2 billion in assets, the fund has benefited from more stable market conditions and improving results from some of its core holdings. While long-term performance remains below average, recent figures suggest the fund is beginning to regain momentum. If market conditions continue to favour growth, the fund could be better positioned for stronger results ahead.
Baillie Gifford Long Term Global Growth Fund
Launched in April 2017, the Baillie Gifford Long Term Global Growth Investment B Acc fund manages around £1.78 billion in assets. The fund aims to outperform the MSCI ACWI Index by at least 2.5% per year over rolling five-year periods, after costs. It invests at least 90% of its portfolio in global equities, focusing on companies with a market value above $4 billion and strong long-term growth potential.
This is a high-conviction, stock-driven strategy that typically holds between 30 and 60 companies. The fund has no specific country or sector limits and targets businesses it believes can grow significantly over time, often in areas such as digital innovation, artificial intelligence, and disruptive technology.
Performance over the past five years has been mixed. The fund returned 42.12%, trailing the sector average of 55.56%. Much of this underperformance came during the 2021–2022 market correction, when high-growth stocks – particularly in the tech sector – sold off sharply.
However, the fund has delivered a strong recovery more recently. Over the last three years, it returned 58.35%, well ahead of the sector average of 29.93%, placing it firmly in the top quartile of its peer group. Its one-year return of 14.96% also stands out, ranking among the top performers in the Baillie Gifford range and significantly outperforming the sector’s 3.71% average.
This rebound has been driven by improved earnings from key holdings and a recovery in global growth markets as inflation and interest rate pressures have begun to ease. While longer-term returns remain below the sector average, the fund’s recent performance suggests its strategy is gaining momentum.
With its focused approach and renewed investor interest in innovation-led companies, the fund remains one of Baillie Gifford’s strongest global equity strategies in the current environment.
Baillie Gifford Pacific Fund
Launched in March 2000, the Baillie Gifford Pacific B Acc fund manages approximately £2.49 billion and aims to outperform the MSCI AC Asia ex-Japan Index by at least 2% per year over rolling five-year periods. The fund invests a minimum of 90% in shares of companies across Asia (excluding Japan) and Australasia, with a strong focus on long-term growth opportunities.
Over the past five years, the fund has delivered strong results, returning 34.27% compared to the sector average of 25.49%. This outperformance reflects the fund’s success in capturing structural growth trends across the region, particularly through holdings in technology, financial services, and consumer-focused businesses.
However, more recent performance has been mixed. Over the past three years, the fund returned 7.85%, slightly behind the sector average of 10.26%. Its one-year performance has been notably weaker, recording a -1.10% loss versus a 4.89% gain for the sector, ranking it 98th out of 107 funds in the IA Asia Pacific ex-Japan sector.
This recent underperformance has been driven by market volatility in Asia’s growth and tech sectors, where the fund remains heavily exposed. In addition, the portfolio was slow to adapt to the recovery in Chinese equities following policy stimulus, and some stock selection decisions have held back returns.
While the fund has a strong long-term record, the recent figures highlight the challenges of navigating short-term shifts in sentiment across the Asian equity landscape. Its future performance will likely depend on improved positioning in response to evolving market dynamics in the region.
Scottish Mortgage Investment Trust
Scottish Mortgage Investment Trust is one of Baillie Gifford’s flagship global growth strategies and among the largest investment trusts in the UK. With assets of nearly £13 billion, it has built a reputation for backing some of the world’s most innovative and high-growth companies.
The trust follows a distinctive strategy, investing in a concentrated portfolio of public and private businesses with disruptive potential. Its holdings span sectors such as consumer goods, technology, and communications, with a focus on entrepreneurial firms - often those with market values under $5 billion - expected to scale significantly over time.
While this long-term, innovation-led approach can generate strong returns during favourable conditions, it also leads to higher volatility. Over the past five years, the trust returned 30.50%, trailing the IT Global sector average of 43.81%. This underperformance was driven by a broad market rotation away from growth stocks during 2021–2022, with notable declines in holdings such as Tesla and Alibaba, and a repricing of private assets across the portfolio.
More recently, performance has improved. Over three years, the trust delivered a return of 40.54%, ahead of the 38.12% sector average and ranking it in the top half of its peer group. Its one-year return of 16.99% ranks 1st out of 11 funds in the IT Global sector, reflecting strong gains from key holdings such as NVIDIA and renewed investor confidence in high-growth businesses.
The trust has also supported its recovery with a £1 billion share buyback programme, which has helped narrow its discount to net asset value and attract renewed investor interest.
Scottish Mortgage remains a high-risk, high-reward strategy best suited to long-term investors comfortable with short-term volatility. While performance can fluctuate sharply with shifts in market sentiment, it continues to offer significant growth potential for those seeking exposure to innovative global companies.
Why Have Baillie Gifford Funds Struggled?
Baillie Gifford has experienced a sustained period of underperformance across much of its fund range in recent years. The firm’s investment style - focused on high-growth companies with long-term potential - has fallen out of favour as market conditions have shifted.
For over a decade, this approach delivered strong returns, especially during a period of low interest rates and cheap capital. Investors were willing to back companies with little or no current profit in the belief that long-term growth would justify high valuations. But from 2021 onwards, rising interest rates, persistent inflation, and tighter monetary policy changed market dynamics. Investors began to favour companies with more predictable earnings and immediate cash flow, which led to a sharp decline in the value of many growth-focused stocks.
Baillie Gifford’s high exposure to sectors such as US technology and Chinese internet companies has added further pressure. While firms like Tesla, Shopify, Tencent, and Alibaba were major contributors to past returns, they have faced greater volatility and weaker investor sentiment more recently. In China, regulatory crackdowns and geopolitical tensions have created additional headwinds, prompting significant valuation declines across key holdings.
Another factor is the firm’s use of concentrated portfolios. Many Baillie Gifford funds hold a relatively small number of stocks, investing more heavily in high-conviction positions. While this can enhance returns when core holdings perform well, it also increases downside risk when market sentiment turns against them. As valuations reset and investor focus shifted to near-term profitability, many of Baillie Gifford’s investments were among the hardest hit.
The combination of macroeconomic shifts, regional market challenges, and a concentrated strategy has contributed to the firm’s recent struggles - a sharp contrast to the strong performance it delivered throughout the previous growth cycle.
What the Future Looks Like for Baillie Gifford
Despite recent setbacks, Baillie Gifford remains committed to its long-term growth strategy. The firm continues to invest in companies it believes have the potential to grow significantly over time, even if those businesses are currently out of favour with the market. While this approach has weighed on recent performance, it could recover if conditions shift back in favour of growth investing.
If interest rates begin to fall and the global economic outlook stabilises, investor appetite for long-duration growth assets may return. This would likely benefit Baillie Gifford’s portfolios, particularly those that have maintained exposure to innovative companies with strong fundamentals. After reaching a low point in late 2022, markets remained subdued until mid-2023. Since then, signs of recovery in the growth sector have started to emerge - providing a more supportive backdrop for the firm’s style.
It’s also important to note that not all Baillie Gifford funds have underperformed. Several of their Japanese and sustainable investment strategies have delivered more resilient returns, even as many of their flagship global growth funds continue to lag their respective sector averages.
Looking ahead, Baillie Gifford’s funds are likely to remain best suited to investors with a long-term outlook and a higher tolerance for risk. Their strategy requires patience and may experience further volatility in the short term. But if market dynamics shift again in favour of innovation-led growth, the firm’s high-conviction holdings could regain momentum and deliver stronger returns over time.
Summary
Baillie Gifford has built a strong reputation for its high-conviction, growth-focused strategy and long-term backing of innovative global companies. While many of its funds have struggled over the past three to five years, the firm’s approach has delivered strong results during more supportive market cycles.
This analysis reinforces the importance of looking beyond short-term results. No fund manager consistently outperforms in every area, and even the most successful firms experience periods where performance falls behind sector averages. Although past performance can provide useful context, it is not a guide to future returns.
What matters more is how well a portfolio is structured for the years ahead. Diversification, appropriate asset allocation, and a clear financial plan are key to building long-term resilience. No single fund or investment brand will lead in every environment, which is why maintaining balance across regions, sectors, and asset classes remains essential.
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If you are unsure whether your portfolio is positioned to meet your long-term goals, a professional review can provide the clarity you need. Book your free review today and take a confident step towards a more structured, forward-looking investment strategy.
