Baillie Gifford American - ouch!!

older_and_no_wiser

I recently rebalanced my workplace SIPP with HL and moved a percentage amount from Blackrock Consensus 85 into the Baillie Gifford American fund. Turns out I did this at exactly the wrong time. Since the following day, the fund has nosedived and it's now 10+% down on my purchase price. I won't disclose how much I moved.

I won't panic and sell as it's my pension fund and there's at least 10 years till I'll need to withdraw from that pot. However this is my first foray into self investing (after a lot of research) and I feel I've made a complete clanger. I'm hoping the fund recovers in the coming years but would like some opinions from those here as to whether you feel Baillie Gifford will come good again. Did they just strike lucky in that fund by buying Tesla and Amazon, Netflix etc at the right time?

Should I reinvest from this fund into something less risky (eg a balanced multi asset fund) once the fund recovers in x months/years? I have a separate personal SIPP which I recently transferred to II and have the vast majority of this invested in the HSBC Global Strategy mixed asset fund.

I suppose I'm looking for some reassurance as I'm getting rather stressed - especially after seeing yet another large fall in the BG American fund today - and I'm licking my wounds!

dunstonh

Since the following day, the fund has nosedived and it's now 10+% down on my purchase price. I won't disclose how much I moved.

10% is nothing for that fund.  It is one of the highest risk in its sector.  It has periods like this every now and then.  It you are saying ouch at 10%, just you wait until 40-50% down happens.

older_and_no_wiser

dunstonh said:

10% is nothing for that fund.  It is one of the highest risk in its sector.  It has periods like this every now and then.  It you are saying ouch at 10%, just you wait until 40-50% down happens.

Haha. Okay then. Are you saying this fund and BG has potential to bounce back then?  BG do seem to have a good track record and are highly regarded. However I read that one of their top investors had recently retired. Yes I'm aware this is a major risk with an actively managed fund over a tracker/index. 

Thrugelmir

swleventhal said:

I'm hoping the fund recovers in the coming years but would like some opinions from those here as to whether you feel Baillie Gifford will come good again.

Baillie Gifford don't control the markets. The Baillie Gifford American fund has a defined mandate. The investment decision to buy (or indeed sell) is yours alone. For every investment you make there should be a rationale. Short term price changes should be considered as noise. If the investment is bought for the long term then ride the waves for a while. Should the investment fail to recover/ fail to deliver because the initial case no longer holds then cut your losses. 

Tesla was good fortune. The real gains have been booked and made. The shares were acquired a decade ago at a minimal cost.  Even on the most optimistic forecasts future growth in the share price on a sustainable basis is limited. Likewise Netflix,  who face increasing levels of competition in the streaming space. 

What's the core of your portfolio?  Hopefully a broad diverse mix of sectors and asset classes. 

older_and_no_wiser

Thrugelmir said:

What's the core of your portfolio?  Hopefully a broad diverse mix of sectors and asset classes. 

The core of my 2 pensions are HSBC Global Strategy and Blackrock Consensus 85. I put a little too much into BG American with hindsight (yes I got too excited about past performance). I've also put a small percentage into BG Shin Nippon, Fidelity China Special Situations and Global Emerging Markets as I wanted more exposure into those areas than the 2 multi asset funds gave me. 

MX5huggy

What made you do this now?

Steve182

MX5huggy said:

What made you do this now?

It's so easy to follow trends and chase past winners, tempting for us all.

JohnWinder

'They' say 'investing is simple...', and you could probably put down some dot points which capture most of what's needed. Then 'they' say '...but it's not easy', which perhaps you just demonstrated one aspect of.

wmb194

Just look at its largest holdings:
https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/b/baillie-gifford-american-class-b-accumulation/fund-analysis

Voyager2002

swleventhal said:

 Yes I'm aware this is a major risk with an actively managed fund over a tracker/index. 

Firstly, some trackers invest in highly volatile sectors (renewable energy earlier this year is a case in point) so your experience is about where you placed your investment rather than who was managing it. (Although in any sector an actively managed 'conviction' portfolio will be more volatile than a more diverse one, and only active managers can have convictions!)

Secondly, while there is a personality cult around successful managers, the success is often produced by teams rather than individuals, so the retirement of one individual may not make as much difference as you fear. Consider the case of Neil Woodford, who was extremely successful when working within an organisation and being forced to follow its rules, but rather less successful when he ran his own funds and so could do whatever he wanted.

El_Torro

A friend of mine put last year's ISA allowance into Baille Gifford American a few months ago (I don't know if it was the full £20k). At the time I told him that he'd be better off in a multi asset fund or global tracker but he was seduced by the past performance of BGA.

A couple of weeks ago he was telling me about how well the fund has performed and how he had made the right decision not to listen to me. I spoke to him yesterday and of course he was bemoaning his "losses" and wondering why he invested in Baillie Gifford American at all. 

The point is investors can be fickle creatures, one of the reasons why the markets are so volatile. Personally I think that having some money in this fund isn't necessarily a bad idea. Just ensure you invest for 10 years or more, as with any investment in shares.

My friend in question has a decent workplace pension, which is well diversified, so I'm not too concerned about the performance of his ISA.