| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | 5.7% | 40.7% |
| 2025 |
|---|
| 40.7% |
Baillie Gifford's Emerging Markets fund delivered strong absolute returns in Q4 2025, capping an exceptional year with 40.69% net returns. The portfolio benefited from the continued evolution of the AI investment cycle, particularly in Korean semiconductors, commodity strength, and emerging markets' growing centrality in global economic architecture. Samsung Electronics and SK Hynix were top contributors, with both companies seeing strong demand for AI memory and fully booked capacity through 2026. China remains a key focus despite geopolitical headwinds, with the 15th Five-Year Plan emphasizing AI, semiconductors, and smart manufacturing. The commodities sector gained from US easing cycles and weaker dollar expectations, benefiting gold, lithium, and copper holdings. Portfolio activity included new positions in Emaar, Capitec, Montage Technology, and InterGlobe Aviation, while reducing exposure to outperforming AI and commodity names. Looking ahead, the manager sees emerging markets as structurally underrepresented relative to their economic contribution, with attractive valuations and diverse growth drivers supporting continued optimism despite technology valuation concerns and geopolitical uncertainties.
Emerging Markets companies are at the forefront of technologies that will shape the decades ahead, yet despite contributing more than half of the world's GDP and even more of its future growth, emerging markets still comprise little more than 10% of the MSCI All Country World Index, creating a significant opportunity for long-term growth investors.
This year has seen a strong rerating of the Emerging Market asset class as a whole; however, the discount to developed markets remains significant. The manager reinforces enthusiasm for opportunities in Emerging Markets and challenges their under-representation in global funds. Despite challenges, there are good arguments to believe the mood will stay positive for Emerging Markets with diverse growth drivers, encouraging operational performance, and attractive valuations.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 15 2026 | 2025 Q4 | 000333.SZ, 000660.KS, 005380.KS, 005930.KS, 0700.HK, 2318.HK, 2454.TW, 2939.TW, 300750.SZ, AXSB.NS, B3SA3.SA, BABA, FM.TO, IMP.JO, KMB.NS, MELI, NPN.JO, RELIANCE.NS, SE, SQM, TSM | AI, China, commodities, emerging markets, growth, semiconductors, South Korea, technology | - | Baillie Gifford's Emerging Markets fund delivered exceptional 40.69% returns in 2025, driven by AI-related semiconductor strength in Korea, commodity recovery, and China's technology policy focus. Despite geopolitical headwinds and technology valuation concerns, the manager remains optimistic about emerging markets' structural underrepresentation relative to their growing economic contribution and attractive long-term growth opportunities. |
| Oct 20 2025 | 2025 Q3 | 000660.KS, 000858.SZ, 005930.KS, 035420.KS, 086280.KS, 2313.HK, 6690.HK, B3SA3.SA, BABA, BIDU, BZ, ELET3.SA, FPT.VN, MELI, TSM, WNS | AI, Asia, Battery, China, emerging markets, semiconductors, South Korea, technology |
CATL CN Samsung Electronics MercadoLibre B3 SA Hyundai Glovis |
Emerging markets outperformed developed markets for the first time since 2020, driven by improving China sentiment and AI tailwinds across Asian supply chains. Key contributors included CATL's strong battery results and Samsung's major Tesla chip deal. South Korean governance reforms and expected Brazilian rate cuts provide additional catalysts. The fund remains well-diversified with strong company fundamentals despite ongoing geopolitical uncertainties. |
| Jul 11 2025 | 2025 Q2 | - | - | - | |
| Apr 18 2025 | 2025 Q1 | 0700.HK, BIDU, FMX, GLOB, MELI, SE, TSM | AI, China, emerging markets, growth, innovation, tariffs, technology, Valuations |
MELI GLOB FEMSA |
Emerging Markets hit an inflection point in Q1 with China leading the charge through policy support and AI innovation via DeepSeek. Portfolio added China exposure while benefiting from strong performance in MercadoLibre and SEA. Despite tariff headwinds, compelling 20-year low valuations and superior growth potential position EM for significant outperformance as fundamental strengths gain recognition. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
CryptoManager views crypto as entering a mature phase after the hype cycle, requiring focus on projects with real utility and value capture. Despite regulatory tailwinds, the market faces structural headwinds including supply overhang and incentive misalignment. The fund de-risked 40% of portfolio and holds zero BTC/ETH exposure for the first time. |
Bitcoin Ethereum DeFi Blockchain Digital Assets |
AIAI stocks overtook crypto as the premier tech risk-on asset during 2025. The manager notes AI's dominance in market performance but provides limited direct investment commentary on the sector. |
Artificial Intelligence Technology Growth | |
FintechManager sees financial markets moving on-chain at an accelerating pace, representing the birth of Fintech 2.0. This convergence between DeFi and TradFi includes tokenization of stocks, commodities, private credit, and real estate. Canton blockchain is highlighted as a high-conviction position for institutional adoption. |
Digital Finance Tokenization Blockchain TradFi Canton | |
PrivacyOn-chain privacy is moving from a cypherpunk niche to a necessary feature. Manager sees dual push from individuals seeking wealth protection and institutions requiring private operations. Expects the next cycle to reward protocols offering programmable privacy with regulatory compliance hooks. |
Cryptography Compliance Institutional Wealth Protection | |
| 2025 Q3 |
AIArtificial Intelligence has proved a helpful tailwind, initially benefiting hardware makers like TSMC and SK Hynix, but now emerging through much of the supply chain with numerous Asian beneficiaries. China's ambitions and capabilities in large language models are being appreciated, with companies like Alibaba and Baidu investing heavily in AI and beginning to enjoy something like the halo of the 'Mag7'. |
Large Language Models Hardware Semiconductors Cloud Computing DeepSeek |
ChinaChina perception has changed significantly this year from being viewed as almost uninvestable to showing improvements across multiple areas. There has been measured fiscal and monetary stimulus, reduction in real estate controls, government support for domestic stock markets, and progress on trade tensions including a potential TikTok deal. |
Stimulus Real Estate Trade Tensions Stock Markets Economic Growth | |
Battery Supply ChainLeading battery maker CATL delivered strong Q2 2025 results with 150GWh in battery sales volume up 35% year-on-year, with Energy Storage Systems accounting for over 20% of shipments. The company maintained 90% utilization rate and announced 15% interim dividend payout, signaling robust cash flow generation. |
Energy Storage Electric Vehicles Lithium Manufacturing Market Share | |
South KoreaViews on the South Korean stock market are being revised as the government seeks to emulate Japan's successful 'Value Up' program. For the first time, company directors now have fiduciary duty to all shareholders, not just the company itself, leading to share price responses particularly among companies with poor governance. |
Corporate Governance Chaebol Value Up Fiduciary Duty Reforms | |
| 2025 Q1 |
ChinaChina has been a frustrating market for many years but the tide seems to be turning with policy headwinds becoming tailwinds. Xi Jinping's meeting with tech entrepreneurs marks an important inflection point showing government commitment to growth and private companies. The main move in portfolios during the quarter has been to add to China exposure. |
China Policy Stimulus Innovation Tech |
AIDeepSeek announcement has been really helpful for reigniting animal spirits in China and appears to have renewed investor interest in Chinese innovation. The fact that it is free and customizable enables a wave of new innovations. Portfolio companies like Ping An, Baidu, Haier and Tencent have adopted DeepSeek's technology to bring down costs and drive growth. |
AI DeepSeek Innovation Technology Applications | |
Trade PolicyEmerging Markets have been navigating the threat of tariffs since 2018 and thinking about how best to adapt. Companies within the portfolio are going to have to work their way through this. TSMC building capacity in the United States and China growing exports to other EM countries are examples of adaptation to trade tensions. |
Tariffs Trade Adaptation Supply Chain Geopolitics | |
E-commerceMercadoLibre was the best performing holding in the portfolios this quarter. This has proven to be an incredibly innovative and adaptive company which has been able to grow its business fast enough to more than offset currency fluctuations while deepening its competitive advantages. SEA, an ASEAN ecommerce and gaming platform, also contributed positively. |
E-commerce Fintech Gaming Growth Innovation |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Oct 20, 2025 | Fund Letters | Alex Summers | CATL CN | Contemporary Amperex Technology Co. Limited | Other | Electrical Equipment | Bull | Shenzhen Stock Exchange | Batteries, dividends, energy storage, EV, Margins, market share, profitability | Login |
| Oct 20, 2025 | Fund Letters | Alex Summers | Hyundai Glovis | 086280 KS | Industrials | Logistics | Bull | NYSE | automotive, Exports, growth, Hyundai, Integration, Logistics | Login |
| Oct 20, 2025 | Fund Letters | Alex Summers | Samsung Electronics | 005930 KS | Information Technology | Semiconductors | Bull | NYSE | AI, Contracts, Foundry, growth, Memory, semiconductors, Tesla | Login |
| Oct 20, 2025 | Fund Letters | Alex Summers | MercadoLibre | MELI | Consumer Discretionary | Internet & Direct Marketing Retail | Bull | NASDAQ | Argentina, Brazil, e-commerce, Fintech, GMV, growth, Margins | Login |
| Oct 20, 2025 | Fund Letters | Alex Summers | B3 SA | B3SA3 BZ | Financials | Financial Data & Stock Exchanges | Bull | Brasil Bolsa Balcão | Brazil, diversification, Exchange, growth, Interest rates, Volumes | Login |
| Apr 1, 2025 | Fund Letters | Baillie Gifford -Emerging Markets | MELI | MercadoLibre | Consumer Discretionary | Internet & Direct Marketing Retail | Bull | NASDAQ | Brazil, digital payments, e-commerce, Fintech, growth, Latin America, marketplace, platform | Login |
| Apr 1, 2025 | Fund Letters | Baillie Gifford -Emerging Markets | GLOB | Globant | Information Technology | IT Services | Bull | NYSE | AI integration, Digital transformation, IT services, Latin America, Software Development, Technology Consulting, User Experience | Login |
| Apr 1, 2025 | Fund Letters | Baillie Gifford -Emerging Markets | FEMSA | Fomento Economico Mexicano | Consumer Staples | Food & Staples Retailing | Bull | NYSE | consumer staples, convenience stores, defensive, dominant market position, Latin America, Mexico, retail | Login |
| TICKER | COMMENTARY |
|---|---|
| 000660.KS | SK Hynix has solidified its leadership in high-bandwidth memory (HBM), emerging as the exclusive HBM supplier for Microsoft's in-house AI accelerator and securing roughly two-thirds of NVIDIA's anticipated HBM4 demand for its next-generation platforms at meaningfully higher price points and margins than prior generations. |
| 005380.KS | We increased exposure to Hyundai Motor, which is navigating the industry's transition to electrification with a focus on profitability and capital efficiency. Its strong mass-market franchise and growing premium brand, Genesis, has taken market share in key segments via attractive product launches. Strategically, the company is prioritising hybrids over pure battery electric vehicles, aligning with consumer preferences. In the critical North American market, hybrids make up ~12% of units but have grown share consistently as EV demand has stalled. Hyundai plans to make hybrid drivetrains available across most of its models over the coming two years, which should enable the company to meet this wave of consumer adoption and improve on its market share gains of recent years. A forward earnings multiple of 6x is an attractive valuation for a market share gainer. |
| 005930.KS | Top gainers included Samsung (+38% in U.S. dollar terms) |
| 0700.HK | Shinya also visited Shenzhen, where Star Magnolia Capital organized an educational visit for our families to Tencent's headquarters, alongside meetings with several promising early-stage companies. |
| 2318.HK | Top gainers included Ping An Insurance (+23%) |
| 2454.TW | MediaTek is Taiwan's leading chip designer, forming a duopoly in the smartphone market with Qualcomm. Stable pricing and cash generation support the business, while artificial intelligence growth potential through its partnership with Google is underappreciated by the market. |
| 300750.SZ | CATL alone commands 38% market share in global lithium-ion battery production |
| BABA | Alibaba was a detractor during the quarter after the company reported mixed fiscal Q2 results. While cloud revenue growth accelerated and margins remained stable, the core commerce business struggled with slowing growth and significant profit pressure, particularly in the quick commerce segment where heavy investment and intense competition led to a sharp decline in profitability. |
| IMP.JO | Impala (+28bps absolute and relative) |
| MELI | E-commerce Volatility: turbulence in our e-commerce portfolio companies, Sea Ltd (Southeast Asia) and MercadoLibre (Latin America), amidst aggressive price wars. |
| NPN.JO | Naspers performed strongly during the year, gaining alongside their holding in Tencent, which in addition to reporting robust results has benefitted from improved sentiment towards Chinese stocks, as well as an improving outlook for its eCommerce portfolio, which continues to perform strongly. The company continues to execute on its value-accretive open-ended buyback program at both Prosus and Naspers. |
| RELIANCE.NS | India-based conglomerate: chemicals, refining, #1 mobile telco and #1 retailer in India |
| SE | During the quarter, we initiated a new position in Sea Limited, a Southeast Asian consumer internet company with an integrated ecosystem combining e-commerce, digital payments, and entertainment. Sea has a diversified business model, with its Shopee e-commerce platform, a mobile-centric marketplace that provides integrated payments, logistics infrastructure, and seller services. |
| SQM | SQM is a Chilean chemical and mining company with extraction rights in the Salar de Atacama, which is the world's largest and lowest-cost lithium deposit. Its share price has been strong amid rising market expectations for electromobility and energy storage systems demand, which supports price recovery and volume growth. SQM achieved record lithium sales volumes in the third quarter, up 43% year-over-year, and achieved approval from China's antitrust regulator for a joint venture that will enable long-term lithium production planning in Chile through 2060. |
| TSM | TSMC was a top contributor during the quarter, driven by robust demand for advanced semiconductor manufacturing and improved gross margins as AI continues to grow strong and the non-AI segment showed signs of recovery. Management raised its revenue growth guidance to the mid-30% range, and given continued strength in demand, AI-related growth targets are expected to move above the current mid-40% level. |
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