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Baillie Gifford turns to global income

Baillie Gifford is to launch a global equity income fund for Dominic Neary, Money Marketing understands.

The group is seeking shareholder approval to convert its existing British-mandated Baillie Gifford income fund into what will be called the Baillie Gifford global equity income fund.

The new vehicle will be managed by Neary, who joined Baillie Gifford last year from Insight.

Neary works within the group’s diversified growth team. The team is headed by Patrick Edwardson, who also manages the £5.9.m Baillie Gifford income fund.

Shareholders will vote on the proposal at a meeting at the end of this month. Money Marketing understands that the Financial Services Authority has already approved the new fund.

Edwardson, who also manages the Scottish American Investment Company has been involved on the fund for several years and became lead manager in August 2008.

However, since then the fund’s assets have fallen from over £20m to under £6m, with UK income never really regarded as one of Baillie Gifford’s core strengths.

According to the Investment Management Association, the income fund is ranked fourth quartile in the UK equity income sector over three years to January 18. It fell 18.1 per centover the period against the peer group average fall of 13.5 per cent, according to Morningstar.

If shareholders approve the conversion, however, the fund would begin a new track record and be placed in a new sector which, because of the lack of a global income peer group, is likely to be either the specialist or unclassified sector.

At Insight, Neary was responsible for the launch and management of the absolute Insight international market neutral funds.

As manager of the Baillie Gifford global equity income fund he will lead stock selection and portfolio construction The fund will be formally launched at next month’s Unique Boutiques conference.

The portfolio is expected to consist typically of 60-100 stocks. Neary’s emphasis will be on owning companies he sees as being attractive irrespective of their yield. He will hold the shares in appropriate weights to deliver an above market portfolio yield.

The diversified growth team of which Neary is part was created by Baillie Gifford last year. The team manages the diversified growth fund, a multi-asset Tax Exempt Fund created to produce income for insti­tutional investors.

Edwardson uses the Income fund as a way of adding income exposure to his portfolio, and will continue to do this with the new fund.


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