Baillie Gifford Global Stewardship Fund

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Kate Pruden
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Baillie Gifford’s Global Stewardship Fund is a global large cap growth equity fund with a performance goal aligned to the MSCI ACWI Index. Past performance suggests that the Fund usually achieves its goal while adhering to its definition of “good stewardship”. This definition leaves much to be desired, as the Fund excludes companies based on a set of negative screens but has otherwise little in the way of a developed or integrated sustainable strategy. Intent on maintaining a status quo, it can hardly be aligned with the pursuit of any UN Sustainable Development Goals, nor does the Fund have a net zero target.  

What it's made of:


Baillie Gifford’s Global Stewardship Fund has accrued net assets of £812,518,000 since its inception on 8th December 2015 (net assets as of June 2021). As of 31st December 2021, its top ten holdings are stated using the following format: company (% weighting | Sustainalytics ESG rating): 

Shopify ‘A’ (4.9 | 23.4) Tesla Inc (3.5 | 28.5) NVIDIA (3.3 | 12.8) TSMC (2.8 | 16.7) Netflix (2.7 | 16.8) MarketAxess (2.5 | 12.4) IMCD (2.4 | 13.8) First Republic Bank (2.4 | 23.4) The Trade Desk (2.3 | 25.5) Workday (2.1 | 13.1)

Both Shopify and Tesla are notable among the Fund’s top holdings for their checkered track records on sustainability. Tesla continued to hold almost $2Bn as of Q4 2021 despite founder Elon Musk’s acknowledgement of the environmental impacts of mining bitcoin earlier the same year. Shopify provides an e-commerce platform for retailers of many varieties to sell goods direct to consumers, potentially facilitating the mass sale of unsustainably manufactured goods. 

As its top holdings suggest, technology receives the largest sectoral allocation in the Global Stewardship Fund (23.12%) followed by Consumer Cyclical (20.17%), Financial Services (13.75%), Industrials (12.92%) and Healthcare (12.53%) to make up its top five sectors. More heavily weighted toward the service sectors, the Fund capitalises upon companies with minimal operational emissions, hence, the companies it invests in are better positioned to move towards net zero and a decarbonised economy. Geographically, the Fund invests in 47.75% US assets; its next biggest geographical allocations are Japan (12.05%), China (%.66%), the UK (5.32%) and Sweden (4.99%). Perhaps unsurprisingly, then, Baillie Gifford assigns the Fund a risk rating of 6/7, placing the Fund out of reach for more conservative investors.

How it's made:


The Global Stewardship Fund takes long positions in global large cap growth equities. It aims to outperform (after deduction costs) the MSCI ACWI Index, as stated in sterling by 2% of more per annum over rolling five-year periods. The Fund achieved this goal in four of the last five financial years, measured beginning from June 2016. Describing the Firm’s approach and conception of “stewardship”, Baillie Gifford states: “Good stewardship means the long-term management of companies in the interests of all stakeholders and broader society”. Suggestive of neutrality over positive progress, this definition emphasises “long-term management” and the interests of “broader society”, however, the alignment of such interests with environment, social and governance (ESG) considerations is not detailed, leaving in its place an impression of adherence to an existing status quo rather than a novel or original concept of stewardship. With 71 holdings as of 30th June 2021, the Fund is not concentrated and is quite rotational (a comparison between the end of Q2 and Q4 2021 shows several of its top ten holdings have shifted). All holdings are subject to negative screens to prevent holdings in companies which derive over 10 per cent of annual revenues from tobacco, alcohol, gambling, armaments, adult entertainment or fossil fuel extraction and production. There are no further greenhouse gas or carbon screens or limits.

Who makes it:


Iain McCombie leads the investment team responsible for Baillie Gifford’s Global Stewardship Fund. Lead manager of Baillie Gifford’s UK Core strategy, Iain joined the Firm in 1994 having previously trained as a Chartered Accountant. He became a partner in 2005, with a background in US and UK equities. The investment team comprises an additional three investment managers, Gary Robinson, Mike Gush and Matthew Brett. Andrew Cave, Head of Governance and Sustainability at Baillie Gifford, is another notable member of the entirely male and majority white investment team. 

More broadly, the fund manager, Baillie Gifford, has a mixed voting record on ESG resolutions, issuing a proxy vote in favour of just 33% of social and environmental solutions in 2021. Furthermore, the Firm details several environmental performance goals in its Environmental Policy, including a 50% reduction in carbon emissions per full time employee equivalent from baseline levels by the end of 2025, and 200% carbon offsetting of our annual absolute carbon footprint, although it is notable that such targets are operational; less clear are the Firm’s efforts, if any, to integrate sustainability and ESG into their investment strategy and decision-making process.