Advice re Baillie Gifford Fund in ISA

funguy

Hi veryone,

Hoping for a bit of general advice please.

I opened a S&S ISA back in early 2021 and invested the money in a fund that seemed to be doing well : Baillie Gifford & Co Limited Baillie Gifford American B Acc (BGAMAB).  Sadly soon after that it plummeted in value and i think i dropped to 50%.  I am investing for the long term (over 20y) so was prepared for this sort of thing. I havent sold any of it. 

However, its recovery seems to be poorer than those of of othe funds such as Vanguard All cap and HSBCAll world etc. 

I wonder if i should sell and move the money into one of these other funds? I appreciate this realises my current losses but it may give me better gains over the next 20y. I realise no one has a crystal ball but im sure there will be other people in similar circumtances and i wondered what most people do in this sort of circumstance. Stick or switch...

Thank you for taking the time to read this.

InvesterJones

If you were prepared for it, why change your mind now?

Think back to the reasons you chose the fund - has anything in your circumstances changed in the meantime? If not, presumably you'd make the same decision to invest in it now.

EthicsGradient

The Baillie Gifford American OEIC is the equivalent of the closed-end investment trust Scottish Mortgage, which is managed by Baillie Gifford. Both had a wild ride up after the start of the pandemic, and then plummeted - and you had the misfortune to buy near the top. Here's a chart for the 2, with an S&P 500 tracker, and also AXA Framlington American Growth (which I owned until October 2023, when I switched it for an S&P 500 tracker, on the grounds that it is almost a closet tracker anyway, so I might as well get the lower annual charges of a true tracker).

Chart Tool | Trustnet

If you set the timescale to start about 16/05/22 (just before Baillie Gifford Am bottomed out), you can see its performance since then has been comparable to the index. So there's nothing fundamentally bad about it at the moment; but it, like Scottish Mortgage (which I also have in my portfolio), is volatile. The managers try to pick big winners, and sometimes succeed, and sometimes fail.

If you want just one fund to buy and hold for the 20 years, then a global tracker like the ones you mention would give you more diversity, and thus a smoother ride. If you're going to add to it as well over the 20 years, then that smoother ride may not matter so much - you average out the peaks and troughs. But who can say which region will do best over 20 years? A global tracker gets you the average.

Hoenir

Without knowing anything about your porfolio as a whole. My broader observation would be:

Switch.  Chalk it up to experience. As well as the good investment performance of the US markets and decline in the £ - $ exchange rate. BG (as an investment house) did extraordinarily well out of from backing Tesla from it's early days . That's what helped drive the performance through to 2021. Peaking when Tesla was admitted to the S&P 500. Odds of BG identifying another Tesla and monetary/market conditions being so accomodating are zero in your lifetime.

From another perspective. Mathematically to recover your 50% book loss. This investment has to gain 100%.  Just to return to breakeven.  Hence the old adage only invest what you can afford to lose. Look after your capital as any gain is better than none, or worse still crystallising a loss. 

Janie2008

It's a very volatile fund.  I would be inclined to keep an eye on it for now.  I probably wouldn't switch yet.  If I did I would probably switch half into something like legal and general international. I would probably wait until hopefully it recovered. 

eskbanker

funguy said:

I opened a S&S ISA back in early 2021 and invested the money in a fund that seemed to be doing well

What made you choose that fund - hopefully you weren't basing an important investment decision simply on performance in the recent past?

funguy

Thank you everyone so far… I picked it originally because it gave good potential (which it may well still do) but as has been said above, is a big gain likely in my lifetime? I guess it’s working out whether the best place is for my current cash and whether it is best left in BG or switched. Mixed opinions so far. 

Janie2008

I would also add I have been in this position several times over the years and switching in most cases proved to be the wrong move but there's no way of knowing. 

Hoenir

Janie2008 said:

I would also add I have been in this position several times over the years and switching in most cases proved to be the wrong move but there's no way of knowing. 

There's always the danger over switching into the current investment fad. Make the switch when there's a solid investment case and a well researched opportunity arises. Far too many investors hang onto dud investments for far too long. It's as if they view they need to prove themselves right rather than crystallise a loss, and accepting that the investment hasn't worked out. If picking winners was easy everyone would be a multi millionaire. 

Bostonerimus1

You should only buy an investment when you understand it and not based on it's recent performance or it's position in some "league table" published in the financial media. I would never buy an actively managed fund like those from Baillie Gifford because I don't trust anyone to beat market indexes over the long term. Their approach is prone to volatile returns as you've discovered. But before you sell take the time to research the fund you have now and other funds that you might buy and develop a long term financial plan. Don't just worry about investing, also do a budget to see where you can save money and pay off any high interest loans ie car loans and credit card balances. Paying those are sure fire ways to get good returns.

AAZ

I am in exactly in same position as you have some money in Baillie and Gifford and thinking what should I do , I brought it when it was at low so made some decent profit but was wondering if it is time to move on