Baillie Gifford has been appointed manager of the Baillie Gifford China Growth Trust plc previously The Witan Pacific Investment Trust plc. The Trust’s investment objective will be to produce long-term capital growth by realigning the portfolio into a ‘best ideas’ strategy consisting of between 40 and 80 listed and unlisted Chinese stocks from across the market capitalisation spectrum. The Trust’s assets under management currently stand at £236m.
On 16 September The Board of Witan Pacific Investment Trust plc that at the general meeting of the Company a resolutions in relation to the proposed change of investment objective and policy, change of investment management arrangements, change of name, and tender offer were duly passed by Shareholders.
Susan Platts-Martin, Chair of Witan Pacific Investment Trust plc said: “The Board is delighted that Shareholders have approved the Proposals. This demonstration of continued support will allow the Company’s move to a China growth strategy to deliver a differentiated approach and provide scope for future long term out-performance, as well as enhance the appeal of the Company.
“The Board looks forward to the next stage of the Company’s development and with the support of Baillie Gifford, believes the change in investment management arrangements will ensure the future success of the Company.
“I would like to take the opportunity to thank the outgoing investment managers, and also Witan, the Company’s executive manager, as well as our other service providers for the support they have given to the Company and to wish them well for the future.”
Investment managers on the Witan trust were Aberdeen Asset Management, Dalton Investments, Matthews International Capital Management and Robeco Institutional Asset Management.
The Baillie Gifford China Growth Trust will be managed by Sophie Earnshaw and Roderick Snell, both members of Baillie Gifford’s emerging markets team. Sophie is currently co-manager of Baillie Gifford China Fund alongside Roderick, who also manages the Baillie Gifford Pacific Fund and is deputy on the Pacific Horizon Investment Trust.
At the end of June 2020, Baillie Gifford had over £44.6 bn invested in both Chinese public and private companies through its global and regional funds and trusts, and now has a local presence through a research centre in Shanghai.
Baillie Gifford China Fund, the firm’s open-ended Chinese equity strategy, has achieved top quartile performance over 1, 3, 5, 10 years and since inception eleven years ago to end of July 2020. Differing from the open-ended strategy, the Baillie Gifford China Growth Trust plc will have the ability to access exceptional growth opportunities in private companies.
James Budden, director of retail marketing at Baillie Gifford & Co, said: “The Baillie Gifford China Growth Trust sits snugly within our retail offering alongside the successful open-ended Baillie Gifford China Fund.
“We believe the realignment of the portfolio from Witan Pacific’s Pan Asia mandate to invest in our best Chinese growth ideas together with Baillie Gifford’s access to private companies should enhance the appeal of the Trust and attract new investors over time.
“As a firm we see China as a compelling opportunity and a region that increasingly cultivates great companies with incredible franchises domestically and internationally. Our newest trust gives another option to those investors keen to allocate directly to Chinese equities.”
Darius McDermott, managing director of Chelsea Financial Services said: “Baillie Gifford has a strong track record of investing in China, with its open-ended fund. Like all Baillie Gifford funds we would expect this trust to have a strong bias to growth and tech. I expect this trust will look to take advantage, as China attempts to cement itself as a global tech power.
“The announcement makes numerous mentions of private companies. Investing in fast growing private companies is something Baillie Gifford has shown an increasing willingness to do with its close-ended products. It has had great success with investments in the likes of Alibaba through Scottish Mortgage. It first invested in 2012 – well before it listed and has made an enormous return on the stock. So, I would expect a lot more private investments in this vehicle as well.
“Baillie Gifford has delivered exceptional performance to clients and has also been a leader on costs, repeatedly reducing fees across its products as they have grown.
Investors should be aware that Baillie Gifford’s managers are ‘aggressive’ – they typically take a very long-term view and they are not afraid to take large short-term losses. Any swing in style away from growth back to value would likely hurt them. This trust is likely to be heavily exposed to the ongoing tensions between the US and China, which is another thing investors should consider.”
Further reading: Investing in China – The key themes