Funds: Baillie Gifford Positive Change

in the IPO in 2018 at an early stage, whereas Deere & Co (DE:NYSE) has been around for well over 100 years.’

Diverse Range Of Companies

‘So, there is real diversity with the types of companies that we invest in and what they are solving as a challenge. In terms of structuring the portfolio it is completely benchmark agnostic.’

Consequently, Rankin explains, the portfolio is vastly different from the MSCI ACWI benchmark (an index of global companies) and this is something investors need to be comfortable with. Drilling down further into the sort of companies the fund invests in you can see they focus on challenges around climate change, inequalities, water scarcity and poverty.

‘In relation to healthcare, we are looking at companies that better understand human biology and diseases, so it might be companies which are active in gene sequencing or single cell analysis for example.

‘Companies that are developing innovative therapeutics, like Moderna which is well known for its Covid vaccine. But is developing almost 50 other vaccines and therapeutics in areas such as HIV vaccines and personalised cancer vaccines which is exciting in terms of impact and investment opportunities,’ says Rankin.

Taking On Environmental Challenges

‘Looking at challenges related to environment we are looking to companies which can reduce our use of water and increase water quality, like water technology company Xylem (XYL:NYSE) which produces water infrastructure systems or John Deere which, through its precision agricultural

STRESS-TESTING THE PORTFOLIO

Rankin says the past 12 months has taught their investment managers a lot in terms of testing the resilience of the companies within their portfolio against a difficult macroeconomic background.

‘We have been looking at every single company in the portfolio in terms of rising interest rates and inflation and how it impacts individual companies.’ technology company, allows farmers to use far less fertilisers and pesticides which is great for farmers as it keeps costs down and mitigates some of the environmental impact of farming.’

Rankin explains that several companies left the portfolio because of this exercise, for example Beyond Meat (NASDAQ: BYND) the plant-based meat substitute company, and cell-based products company Berkeley Lights (NASDAQ: CELL). ‘The work of understanding the resiliency of companies never finishes,’ she adds.

After a strong start from the fund’s inception in January 2017, it has struggled of late due to the macro environment of higher interest rates and higher global inflation.

The fund’s performance over one year (up to 31 March 2023) of -9.3% is disappointing but over three years the performance has been significantly better with an annualised return of 18.4% and over five years this figure is 16.4%. This compares with -2.7% for its Investment Association Global sector for the last 12 months and 14% and 8.7% for the last three years and five years, respectively.