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Baillie Gifford investment trust asks investors to consider buy-backs as dividends lowered

Mixed Investment 0-35% SharesThe Baillie Gifford UK Growth Fund plc has announced it will ask shareholders to renew the mandate to repurchase up to 14.99 per cent of shares in a share buy-back scheme.

The policy seeks to operate in the “best interests” of shareholders” by taking into account the company’s share price discount to net asset value when compared with peer group trusts.

The board says it believes the investment company “benefits” from the flexibility of being able to reissue shares.

Meanwhile, it has been announced there will be a stepped reduction in dividend payments. Net revenue return per share for the year to 30 April 2019 was 5.12p versus 6.58p the year before. A final dividend of 2.95 per share is being recommended, making a total 4.45p for the year ending 30 April 2019.

The company’s second dividend has historically been paid as an interim dividend, but this year it will be paid as a final dividend, allowing shareholders the opportunity to vote at the AGM. As a consequence, payment of the final dividend will be made after this date rather than at the end of July as in recent years.

The stock exchange announcement also states directors will be seeking shareholder approval to extend the life of the investment company for a further five years at its annual general meeting on 1 August 2019.

If the continuation vote is not approved, directors will convene a meeting in November confirming the voluntary winding up of the company. Shareholders will subsequently be entitled, in proportion to their respective holdings, to the net proceeds following the liquidation of the portfolio.

Worst-performing funds of 2018 bounce back up to 19%

Directors of the trust have acknowledged performance over the past five years has been “disappointing”. The portfolio was previously managed by Schroders until June 2018 and has since been managed by Baillie Gifford after a long period of underperformance. Shares held by investors through the Schroder Isa scheme platform have either been transferred to third party platforms or absorbed by natural market demand, the announcement today says.

The chairman’s statement says: “It is still too early to comment on the longer-term performance of the new portfolio managers. However, having conducted a thorough review of the managers’ approach and resources we believe Baillie Gifford has the right team to manage a portfolio comprising judiciously selected investments with good long-term growth prospects.

“In addition, the board believes that Baillie Gifford will market the company appropriately and has noted the positive reaction of the company’s share price immediately following news of the Manager change and since.”

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