| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 6.9% | - | 19.0% |
| 2025 | 2024 | 2023 | 2022 | 2021 |
|---|---|---|---|---|
| 19.0% | 2.9% | 10.4% | -32.0% | 3.2% |
Baillie Gifford's International All Cap portfolio underperformed its benchmark in Q4 2025 amid a challenging environment for quality and growth stocks. The portfolio faced pronounced style headwinds as both quality and growth stocks underperformed the broader international market by margins rarely seen in recent years. Performance reflected a familiar divide between companies exposed to structural growth themes, which generally contributed positively, and those more sensitive to near-term consumer and cyclical weakness. Key detractors included consumer-facing platforms like Rightmove and Autotrader, which faced AI-related uncertainty, and Exor, impacted by weakness in autos and agricultural equipment. Conversely, semiconductor companies including TSMC and Samsung Electronics were significant contributors, benefiting from robust AI-driven demand for advanced chips and improving memory market conditions. Other contributors included Games Workshop, Roche, Chugai Pharmaceutical, DSV, and LVMH. Despite near-term headwinds, the manager maintains strong conviction in the long-term prospects of portfolio companies, emphasizing their durable competitive advantages and structural growth positioning. The focus remains on patient capital deployment in exceptional businesses positioned to compound value over time.
Baillie Gifford maintains conviction in high-quality growth businesses with durable competitive advantages, focusing on companies operating in markets shaped by powerful structural forces and led by management teams focused on long-term value creation.
Looking to the future, conviction in the long-term prospects of the businesses owned remains strong. Many operate in markets shaped by powerful structural forces, possess durable competitive advantages, and are led by management teams focused on long-term value creation. The focus remains unchanged: to invest patiently in exceptional businesses and allow them the time to compound in value.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 15 2026 | 2025 Q4 | 005930.KS, 3317.T, 4519.T, 6869.T, 8035.T, ASML, AUTO.L, DSV.CO, EXO.MI, GAW.L, MC.PA, MELI, NMET.DE, RMV.L, ROG.SW, TSM | AI, growth, healthcare, international, Luxury, Quality, semiconductors, technology | - | AI continues to drive robust demand for advanced chips, particularly benefiting TSMC and related semiconductor equipment companies. However, AI tools and functionality create uncertainty for online platforms like Rightmove and Autotrader, as markets take a cautious stance on potential position erosion or increased investment needs. The impact appears mixed across sectors with clear benefits for chip manufacturers but concerns for consumer-facing platforms. Semiconductor companies were among the most significant contributors to performance, driven by robust demand for advanced chips used in artificial intelligence. TSMC benefited from AI chip demand, Samsung was supported by improving memory market conditions particularly high bandwidth memory, and related equipment companies like ASML, Tokyo Electron and Chroma also performed well during the quarter. The portfolio maintains a structural bias towards high-quality growth businesses, though this created headwinds during the quarter as quality stocks underperformed the broader international market by a margin rarely seen in recent years. The manager emphasizes focus on exceptional businesses with durable competitive advantages, strong balance sheets, and compelling long-term growth opportunities. LVMH contributed positively to performance in the quarter, supported by improving trends in Asia and the resilience of its leading brands after a period of weaker demand for luxury goods. The recovery suggests stabilization in the luxury sector following previous weakness. |
| Oct 20 2025 | 2025 Q3 | - | Artificial Intelligence, Diagnostics, financials, healthcare, semiconductors | - | The fund underperformed as Japanese diagnostics firm Sysmex and Singapores UOB weighed on returns, while ASML and TSMC led gains amid surging AI semiconductor demand. Managers added bioMérieux and CaixaBank for exposure to diagnostics and resilient financials. They remain focused on quality compounders benefiting from AI, healthcare innovation, and regional recovery. |
| Jul 11 2025 | 2025 Q2 | - | Asia, Europe, International Growth, tariffs | - | |
| Apr 18 2025 | 2025 Q1 | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
AIAI has been integrated into RGA's research process through tools like NotebookLM, Gems in Gemini, and Claude Code. The firm views AI as a force multiplier for human judgment rather than a replacement, emphasizing the Kasparov Law principle. They believe the market narrative around AI displacement is swinging to unhelpful extremes, creating investment opportunities. |
Machine Learning Automation Software Productivity Innovation |
LuxuryNew investment in Swatch represents exposure to luxury watch brands including Omega, Longines, Tissot, and others. The investment thesis is based on tangible assets including Swiss real estate and the potential for operating leverage when luxury demand recovers from current structural pressures. |
Watches Swiss Brands Premium Recovery | |
QualityThe company emphasizes investing in businesses with excellent economics, durable competitive advantages, and high-integrity management. This quality focus is evident in concentrated equity holdings and operating business acquisitions. |
Durable Advantages Management Quality Economic Moats Competitive Position | |
SemiconductorsRGA initiated a position in Lattice Semiconductor, viewing it as an under-appreciated AI winner with immediate gains and longer-term optionality. Lattice's focus on efficiency and advantages in low-power, small footprint FPGAs position it favorably for AI servers, particularly as the only Post-Quantum Cryptography secure chips on the market. |
FPGAs Security Efficiency AI Infrastructure Programmable | |
| 2025 Q3 |
AIAI has been integrated into RGA's research process through tools like NotebookLM, Gems in Gemini, and Claude Code. The firm views AI as a force multiplier for human judgment rather than a replacement, emphasizing the Kasparov Law principle. They believe the market narrative around AI displacement is swinging to unhelpful extremes, creating investment opportunities. |
Machine Learning Automation Software Productivity Innovation |
FinancialsEuropean banks have been rehabilitated after years in purgatory, with returns of 77% in 2025. Return on equity has normalized above 12% following exit from ultra-low rates, while capital positions have been rebuilt. However, supportive factors are well-appreciated by markets, reflected in significant valuation re-rating. |
Banks Return On Equity Interest Rates Capital Valuations | |
HealthcareHealthcare was the strongest relative contributor in the quarter with holdings increasing nearly +16% compared to benchmark returns of roughly +12%. Exact Sciences was acquired for a significant premium by Abbott Laboratories resulting in an +86% return, while other strong performers included Tarsus Pharmaceuticals, Glaukos following approval of a new product, Penumbra, and Repligen driven by strong earnings results. |
M&A Product Approval Earnings Biotech | |
| 2025 Q2 |
International Growth |
|
Tariffs |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| No Elevator Pitches found | ||||||||||
| TICKER | COMMENTARY |
|---|---|
| 005930.KS | Top gainers included Samsung (+38% in U.S. dollar terms) |
| 3317.T | Chroma also did well as related semiconductor production equipment companies also did well in the quarter. |
| 4519.T | During the quarter we initiated a position in Chugai Pharmaceutical, which is majority owned by Roche. We like the continued sales growth of its core products, and we think the market had underestimated the potential royalty payments for Orforglipron, a weight-loss pill which Chugai has licensed to Eli Lilly. |
| 6869.T | We did begin building a position in a new holding, Sysmex Corporation, a global leader in diagnostic equipment, with a large installed base and recurring revenue characteristics that we believe support long-term value creation. |
| 8035.T | Tokyo Electron did well in the quarter as related semiconductor production equipment companies also did well. |
| ASML | ASML, TSMC, and Arista Networks are key players in the AI build out supply chain. |
| AUTO.L | Auto Trader, a UK-listed automotive classifieds platform, was the Fund's largest detractor. This reflected a combination of short-term factors unrelated to its half-year earnings release in November, which was a positive surprise. These included the rollout of its new Deal Builder product in late 2025, which triggered backlash from a small but vocal portion of its UK dealer base and threats of coordinated cancellations. While actual cancellations were well under 1% of its customer base, and management undertook rapid and extensive outreach efforts with dealers, this episode likely weighed on investor sentiment. |
| DSV.CO | DSV A/S was one of the top five winners for the quarter. |
| EXO.MI | Decline in prices of holdings and widened discount to NAV. We have favoured Exor despite/because of the recent downturn in Ferrari shares, given the strong see-through publicly listed element of over 85% of the portfolio, allied to strong capital management. |
| GAW.L | Games Workshop was identified as one of the largest contributors in 2025 and also contributed meaningfully in 2024, a reminder that patience pays when a business is delivering. |
| MC.PA | Top gainers among the Fund's holdings included LVMH (+24%) |
| MELI | E-commerce Volatility: turbulence in our e-commerce portfolio companies, Sea Ltd (Southeast Asia) and MercadoLibre (Latin America), amidst aggressive price wars. |
| NMET.DE | Nemetschek by ongoing weakness in global construction activity. |
| RMV.L | Rightmove, highly cash-generative UK online marketplace, saw weak share price performance. While AI tools and functionality may turn out to be beneficial to online platforms in the long term, in the near term, the market is taking a cautious stance on the impact of AI, based on the possibility that their positions could be eroded or that investment may need to increase. |
| ROG.SW | Top gainers among the Fund's holdings included Roche (+27%) |
| 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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