Baillie Gifford US Growth Trust has posted a hefty decline in share price and net asset value as markets in the United States suffered heavy losses.
The £584.2 million fund – which has investments in Tesla, Moderna and Amazon – suffered a 45.5 per cent fall in share price and a 35.3% drop in net assets during the year to the end of May. That compared to a total return of 12.2% by its benchmark index, the S&P 500.
The second half of its financial year largely overlapped with widespread sell-offs in the first six months of 2022 as investors fretted over surging inflation, rising interest rates, and impact of the war in Ukraine.
The tech-heavy Nasdaq, home to giants such as Netflix and Apple, has been hit especially hard. The Dow Jones posted its worst quarter since 2020 during the second three months of the year, while the S&P 500 index of the largest listed companies in the US suffered its worst first half in more than 50 years.
READ MORE: Edinburgh fund manager achieves ‘robust’ returns for flagship trust
“In last year’s report, with all our lives still impacted significantly by the Covid-19 pandemic, I wrote about equity markets experiencing some of the most significant instability in living memory,” chairman Tom Burnet said.
“A year later, it feels like the same phrase still rings true, with the valuations of growth stocks particularly hard-hit in recent months.”
Launched in March 2018 by Edinburgh-based Baillie Gifford, the trust’s managers urge its shareholders to judge performance over a minimum of five years. Headed by portfolio managers Gary Robinson and Kirsty Gibson, its remit is to provide increasing asset value by investing in public and private US companies with high growth potential.
During the year the fund invested in seven new private companies and sold its stakes in four firms – Zillow, Vroom, Glaukos and Lyft – deemed to have “veered off the track". Real estate technology company Zillow, for example, decided to exit the institutional home buying and selling market that the fund’s managers deemed key to its future success.
As of the end of May investments in 24 private companies accounted for 36.4% of total assets, with the remainder spread across an array of listed firms, the largest holding being advanced rocket specialist Space Exploration Technologies.
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