Baillie Gifford Investment Grade Bond A

Primarily holding quality corporate bonds to achieve an income level above UK Gilts.

  • 104.70p
    Price (Inc)

    These are the shares in the fund that pay out an income to clients. The income is made up of the total dividends – the money a company can pay out to its investors – from the companies in the fund.

  • -
    Price (Acc)

    These are the shares in the fund that don’t pay out an income to clients. Any dividends – the money a company can pay out to its investors – are reinvested into companies in the fund. Despite no income, the shares should be worth more over time. Good incentive, eh?

  • 3.50% 0.00%

    Initial charge

    Some funds charge you when you first invest, which is aptly known as the initial charge. They’re usually between 3-5% but at Bestinvest, we usually don’t charge you a penny!

  • 1.00%
    Annual management charge

    This is how much the fund management company charges to run the fund. It’s like paying a babysitter, dog sitter or house sitter (that makes well-informed, heavily researched changes to improve your baby/dog/house when needed).

  • 1.07%
    Ongoing charges

    This stands for Ongoing Charges Figure. It’s the cost of running a fund and includes admin fees, manager fees, administration costs, etc.

  • 2.70%
    Yield

    How much the fund is currently paying out in income to investors. It’s NOT to be confused with the overall growth of a fund – a very different thing indeed. It’s also NOT a guarantee of future pay-outs, just a snapshot. This is more what it’s not than what it is…

Prices as at 18 September 2020, fund data last updated 01 December 2002

Primarily investing in quality corporate bonds rated BBB(-) and above, the target is to maximise total return whilst producing a level of income higher than the UK Gilt market. A stock selection approach is used to identify specific issue pricing anomalies, with interest rate and yield curve risk kept to a minimum. Managed from Scotland by a reasonably sized team of analysts and managers.

Fund summary

Sector £ Corporate Bond
Structure OEIC
Launched March, 2003
Size £173m
Yield 2.70%
Charging basis Capital
Dividends paid 28 Feb, 31 May, 31 Aug, 30 Nov

Charges

Standard initial charge 3.50%
Initial charge via Bestinvest 0.00%
Additional bid/offer spread 0.00%
Annual management charge 1.00%
Ongoing charges figure 1.07%

Allocation

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Investment process

The fund's objective is to maximise total return, whilst producing a yield above that of UK gilts. Investing primarily in a diverse portfolio of Sterling denominated investment grade bonds that are rated BBB(-) and above. They will manage the funds to exploit the philosophy that the majority of bonds are held by passive managers and that the rating agencies are slow to change ratings. The stock selection is focused on identifying where the greatest risk adjusted return can be found. This will be done through in house quantitative and qualitative research combined with information ratio analysis. For the bond in question, an automated credit score is produced using a rating agency methodology and the managers look to identify disparity from the current actual rating. The qualitative research involves assessment of industry, competitive position/advantage, financial strength and management attitude.

Manager research

Average monthly relative returns

  • 15/16 -0.26%
  • 16/17 -0.01%
  • 17/18 0.01%
  • 18/19 0.08%
  • 19/20 -0.20%

Bestinvest MRI

  • 3 years -0.04%
  • 5 years -0.08%
  • Career -0.11%
  • 3 years 44.40%
  • 5 years 29.80%
  • Career 24.80%

Performance figures are based on the average of monthly percentage returns relative to the benchmark index.

Stephen Rodger

Stephen Rodger joined Baillie Gifford in May 2000, as a corporate bond investment manager. Prior to this he worked at Prudential Portfolio Managers for 6 years in a similar role. Stephen graduated in Management Science from St Andrews University in 1990, and initially worked for Phillips and Drew Fund Management for 3 years before leaving to take a Masters degree in Accounting and Finance at the London School of Economics. Stephen is a member of the Institute of Investment Management and Research. The eight strong Baillie Gifford fixed interest team use quantitative and qualitative research in order to identifying bonds that offer the greatest risk adjusted return relative to the peer group in question. They attempt to calculate the valuation gap between their predicted stance of a bond issuer and the current market perception.

Track record

Stephen Rodger has 18.4 years experience of managing mutual funds in this sector. Over this period the average monthly return relative to the benchmark index has been -0.11%. During the worst period of relative performance (from August 2002 - March 2009) there was a decline of 24% relative to the index. The worst absolute loss has been 33%.

Periods of worst performance

Absolute -33.00% (November 2006 - March 2009)
Relative -24.00% (August 2002 - March 2009)

About the MRI

Our unique indicator: the Bestinvest Manager Record Index (MRI) measures the likelihood that the fund manager is adding value through their decisions. It is based on their performance record over the course of their career, adjusted for the amount of risk taken. MRI is an important contributor to our fund rating system but it is also vital to take account of qualitative factors. It is also very important to select funds to form a cohesive portfolio with an appropriate overall risk level.

Allocation

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Top 10 holdings

Data accurate as at 31 July 2020

3.7% Uk Treasury 4.25% 07/06/2032
2.3% European Investment Bank 4.5% Mtn 07/03/44 Gbp1000
2.2% Kfw International Finance Inc 6% Notes 7/12/2028 Gbp(Var)
2% Network Rail Infrastructure Finance 4.75% Nts 22/01/24 Gbp1000
1.8% Lcr Finance 4.5% Gtd Bds 2028 Gbp1000 `144a` (Br)
1.7% Kfw 5.75% 2032
1.6% European Investment Bank 6% Bds 7/12/2028 Gbp1000
1.6% Network Rail Infrastructure Finance 4.75% Nts 29/11/35 Gbp50000
1.6% Annington Funding 3.184% 2029
1.5% Citigroup 8.125% 2039
Source: Trustnet

Sector breakdown

Utilities 15.00%
Banks 12.00%
Others 12.00%
Government Guaranteed 9.00%
Real Estate 8.00%
Telecommunications 7.00%
Government Bonds 7.00%
Insurance 6.00%
Technology 6.00%
Fixed Interest 5.00%

Portfolio

Concentrated portfolio of 30-45 holdings.

Constraints

There is no interest rate bet versus the universe and any credit risk will be taken in shorter-dated bonds.

Key Investor Information

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