| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | -2.4% | 17.2% |
| 2025 |
|---|
| 17.2% |
The Baillie Gifford International Growth Fund declined in Q4 2025 despite a strong market backdrop, underperforming its benchmark as growth stocks faced headwinds. Key detractors included Spotify, Sea Limited, and Ferrari, while Advantest, DSV, and TSMC contributed positively. The fund initiated a new position in SK Hynix, a leading memory chip manufacturer positioned to benefit from structural AI demand through its technological leadership in high-bandwidth memory. This position was funded by reducing semiconductor holdings, primarily Advantest, following strong performance. The managers maintain their long-term growth focus, emphasizing that share prices follow earnings growth over time. They remain confident in portfolio companies' ability to capitalize on global change, particularly in AI-driven semiconductor demand, e-commerce expansion in emerging markets, and streaming platform monetization. With 87% active share and 22% annual turnover, the fund continues its genuinely active approach, investing in exceptional businesses with five-year research horizons while staying disciplined through market volatility.
The fund aims to produce good long-term performance by investing in a committed portfolio of international growth stocks with the potential to grow substantially more quickly than the market, conducting research with a five-year time horizon and maintaining genuinely active positioning with low turnover.
The managers remain confident in their team, process, and the ability of portfolio companies to capitalize on profound global change and translate that into long-term earnings growth. They acknowledge they cannot time market style shifts but maintain conviction that share prices follow earnings growth over time, with evidence that the Fund's earnings power can outpace the market.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 15 2026 | 2025 Q4 | 1299.HK, 6146.T, 6857.T, 6861.T, ADYEN.AS, ARGX, ASML, ATCO-A.ST, DSV.CO, GALP.SW, MELI, NU, OR.PA, RACE, RMS.PA, SE, SHOP, SPOT, TSM, WTC.AX | AI, E-Commerce, growth, international, semiconductors, technology |
SPOT SE RACE DSV DC GALD SW |
Baillie Gifford's international growth fund underperformed in Q4 despite strong AI semiconductor momentum. New SK Hynix position capitalizes on structural memory demand while Spotify and Sea Limited faced near-term headwinds. Managers maintain long-term conviction in portfolio companies' earnings growth potential, emphasizing their active approach and five-year investment horizon through market volatility. |
| Oct 20 2025 | 2025 Q3 | 300750.SZ, 6857.T, 9926.HK, ADYEN.AS, ASML, MELI, SHOP, SPOT | Biotech, E-Commerce, Energy Transition, global, growth, semiconductors, technology |
ADYEY SPOT MELI ASML NA |
Baillie Gifford's International Growth Fund underperformed in Q3 2025 despite adding positions in EV battery leader CATL and Chinese biotech Akeso. Semiconductor holdings Advantest and ASML drove performance on AI demand while e-commerce platforms faced near-term margin pressures. The fund maintains conviction in scarce assets with compounding advantages aligned with structural change over short-term cycles. |
| Jul 11 2025 | 2025 Q2 | - | - | - | |
| Apr 18 2025 | 2025 Q1 | 1211.HK, 6146.T, 6273.T, ASML, GALDF, GMAB, OR.PA, PDD, SPOT, WTC.AX, WXB | China, Geopolitical, growth, international, long-term, technology, volatility | - | Baillie Gifford's International Growth Strategy focuses on exceptional growth companies despite recent geopolitical volatility. Chinese holdings like BYD and Pinduoduo outperformed while semiconductors faced cyclical weakness. The team made strategic portfolio adjustments, adding Galderma and Disco while reducing Genmab exposure. Management remains optimistic about international opportunities, emphasizing long-term operational performance over short-term market noise. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
AIArtificial intelligence investment drives sustained demand for semiconductor test equipment and memory chips. Advantest benefits from AI data center investment with improved visibility, while SK Hynix leads in high-bandwidth memory critical for AI infrastructure bottlenecks. |
Semiconductors Data Centers Memory Infrastructure |
SemiconductorsStrong performance from semiconductor holdings with Advantest exceeding expectations and raising guidance. New position in SK Hynix reflects structural demand for high-bandwidth memory as AI models scale and memory bandwidth becomes critical bottleneck. |
Memory Testing Equipment Cyclical | |
StreamingSpotify showed continued operating progress with 11% user growth to 713 million and 12% subscriber growth to 281 million. Operating income expanded to mid-teens margin with record quarterly free cash flow, though shares weakened on near-term margin expectations. |
Audio Subscriptions Margins Growth | |
E-commerceSea Limited delivered strong results with 40% group revenue growth and 68% adjusted EBITDA growth. Shopee showed strong gross merchandise value and revenue growth, though profitability fell below expectations as management invested in logistics and fulfillment. |
Southeast Asia Latin America Logistics Gaming | |
LogisticsDSV reported 63% revenue growth and 23% EBIT increase aided by Schenker acquisition. Management highlighted accelerated integration progress and early customer retention evidence, with confidence in delivering substantial synergies over time despite mixed organic demand. |
Freight Acquisition Integration Synergies | |
LuxuryFerrari shares fell after Capital Markets Day where 2030 targets and electrification messaging underwhelmed the market. Despite being a top long-term contributor, the fund reduced the position during the year to better align sizing with conviction while maintaining confidence in long-term compounding potential. |
Sports Cars Electrification Pricing Power Brand | |
| 2025 Q3 |
AIThe fund has meaningful exposure to the semiconductor value chain providing equipment critical to the digital age. Rising demand for AI-related chips is pressuring customers to push into more advanced nodes and adopt extreme ultraviolet lithography technology. Testing intensity grows as chip complexity and AI workloads scale. |
Semiconductors Testing Lithography Chips |
E-commerceLeading emerging market consumer internet companies like MercadoLibre illustrate the scale of opportunity to digitize consumption. Shopify reinforced its position as the operating system for modern commerce with broad-based growth and strong momentum in Europe where GMV rose over 40% last quarter. |
Digital Commerce Platforms GMV Consumption | |
Energy TransitionCATL, the world's largest producer of electric vehicle batteries with global market share approaching 40%, is at the heart of the energy transition. Beyond EVs, it is building capacity for grid-scale storage and exploring next-generation chemistries such as sodium-ion. |
EV Batteries Grid Storage Battery Technology | |
BiotechnologyAkeso is a leading Chinese biotechnology company with antibody expertise at its core. Its standout lung cancer drug, Ivo, has shown strong late-stage data and was recently licensed to a US partner. Western pharmaceutical companies are increasingly in-licensing Chinese assets, recognizing the quality of science being produced. |
Antibodies Oncology Licensing China Biotech | |
StreamingSpotify's shift from pure user growth to disciplined monetization is increasingly evident. With nearly 700 million monthly active users and generating €700 million in free cash flow last quarter, the platform is demonstrating improving economics with scale while investing in podcasts and audiobooks. |
Monetization Podcasts User Growth Cash Flow | |
| 2025 Q1 |
GrowthThe strategy focuses on long-term ownership of exceptional growth companies, seeking at least 50 holdings across two types: companies that can grow rapidly and disrupt industries, and those that can compound growth at exceptional rates over long periods. The team remains excited about the international growth opportunity set despite market volatility. |
Growth Compounding Disruption Long-term International |
E-commerceSeveral emerging market e-commerce companies have performed well in the portfolio. Chinese e-commerce names like Pinduoduo have been strong performers, with the company continuing to execute well in a competitive market environment. |
E-commerce Emerging Markets China Digital Marketplaces | |
Electric VehiclesBYD, the Chinese EV company, has been a strong performer, now making a million cars per quarter and growing faster than Tesla. Their international expansion is particularly impressive, with sales outside China growing almost 90% in the most recent period. |
Electric Vehicles China Manufacturing International Expansion Tesla | |
SemiconductorsThe portfolio includes semiconductor names like ASML and Disco, which have experienced volatility typical of the industry. The team views recent weakness as noise rather than signal, maintaining optimism about long-term growth prospects in this volatile but promising sector. |
Semiconductors Volatility Equipment Long-term Cyclical | |
BiotechnologyGenmab, a Danish biotech business, has been a disappointment as their successful multiple myeloma product approaches patent expiration by the end of the decade. The team has reduced the position significantly and is reassessing the appropriate position size going forward. |
Biotechnology Patents Multiple Myeloma Denmark Pharmaceuticals |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jan 15, 2026 | Fund Letters | Tom Coutts | SPOT | Spotify Technology S.A. | Communication Services | Interactive Media & Services | Bull | New York Stock Exchange | advertising, AI, Margins, Streaming, Subscriptions | Login |
| Jan 15, 2026 | Fund Letters | Tom Coutts | SE | Sea Limited | Consumer Discretionary | Internet Retail | Bull | New York Stock Exchange | ecommerce, Fintech, Gaming, Logistics, scale | Login |
| Jan 15, 2026 | Fund Letters | Tom Coutts | RACE | Ferrari N.V. | Consumer Discretionary | Automobiles | Bull | New York Stock Exchange | Autos, Brand, Luxury, Pricingpower, Scarcity | Login |
| Jan 15, 2026 | Fund Letters | Tom Coutts | DSV DC | DSV A/S | Industrials | Air Freight & Logistics | Bull | NASDAQ | Integration, Logistics, Margins, scale, synergies | Login |
| Jan 15, 2026 | Fund Letters | Tom Coutts | GALD SW | Galderma Group AG | Health Care | Pharmaceuticals | Bull | Swiss Exchange | Aesthetics, dermatology, growth, Launches, Validation | Login |
| Oct 20, 2025 | Fund Letters | Tom Coutts | ADYEY | Adyen N.V. | Information Technology | Financial Technology | Bull | Euronext Stock Exchange | Digital, Fintech, guidance, Payments, profitability, Scalability, tariffs | Login |
| Oct 20, 2025 | Fund Letters | Tom Coutts | SPOT | Spotify Technology S.A. | Communication Services | Entertainment | Bull | NYSE | Audio, FCF, growth, Margins, monetization, Streaming, Users | Login |
| Oct 20, 2025 | Fund Letters | Tom Coutts | MELI | MercadoLibre Inc. | Consumer Discretionary | Internet & Direct Marketing Retail | Bull | NASDAQ | Brazil, e-commerce, Fintech, GMV, growth, Logistics, Margins | Login |
| Oct 20, 2025 | Fund Letters | Tom Coutts | ASML NA | ASML Holding N.V. | Information Technology | Semiconductor Equipment | Bull | Euronext Stock Exchange | AI, Equipment, Euv, growth, Margins, Monopoly, semiconductors | Login |
| TICKER | COMMENTARY |
|---|---|
| 1299.HK | Proceeds were deployed to three Asian companies: 1) Alibaba Group Holding is the largest Chinese e-commerce and cloud company, which has stabilized its e-commerce business and invested in the growing cloud business; 2) Asian insurance company AIA Group Limited is leveraging growing demand from Hong Kong, China and other Asian countries; and 3) Chinese company Ping An Insurance may benefiting from the structural demand for health and protection products given the aging population and limited coverage of national insurance. |
| 6857.T | Advantest is a leading provider of semiconductor test equipment. Results exceeded expectations, with management meaningfully raising guidance, citing sustained demand tied to artificial intelligence data center investment and improved visibility. Held in the Fund since the second quarter of 2024, Advantest has been a top contributor to performance, reflecting its mission-critical role in advanced testing and deep customer relationships - attributes that should support attractive growth as semiconductor complexity rises. |
| ARGX | Shares of argenx SE contributed to performance, rising 14.0% during the fourth quarter and finishing 2025 up 37.8%. Argenx is a leading biotechnology company best known for developing Vyvgart, the leading FcRn inhibitor for the treatment of autoimmune conditions. Sales of Vyvgart continue to progress well in Generalized Myasthenia Gravis (Generalized MG) while the Chronic Inflammatory Demyelinating Polyneuropathy (CIDP) launch is also off to a strong start. |
| ASML | ASML, TSMC, and Arista Networks are key players in the AI build out supply chain. |
| ATCO-A.ST | Atlas Copco supplies industrial products and components, such as vacuum valves, air compressors, filters and pumps, into a wide variety of end markets. We expect the businesses we own to be commercially ambitious and look to grow their revenue faster than the markets they serve – even more so when those markets are challenged. We sold Atlas Copco in May, having become disappointed with its lack of observable self-help initiatives. |
| DSV.CO | DSV A/S was one of the top five winners for the quarter. |
| MELI | E-commerce Volatility: turbulence in our e-commerce portfolio companies, Sea Ltd (Southeast Asia) and MercadoLibre (Latin America), amidst aggressive price wars. |
| NU | Since our mid-year update, Nubank's shares increased 37%, bringing full-year performance to +63%. This performance has been driven primarily by fundamentals, with earnings growing approximately 42% over the same period. Brazil remains a powerful profit engine, with high customer engagement, improving risk-adjusted returns, and expanding penetration across consumer and SME banking. Mexico continues to emerge as the next major growth vector: customer penetration has reached ~14% of the population. |
| OR.PA | In 2024, it seemed to us that other investors were unduly focused on a slowdown in consumer spending in China, an important market for L'Oréal yet contributing only 17% of its sales. L'Oréal is a broad, balanced business such that in any given year, faster-growing parts of the world will typically offset the weaker ones. We saw this in 2025, where strength in markets such as Europe, the Middle East and South America offset sluggish markets in China and the US, allowing L'Oréal to deliver a year of solid earnings growth. |
| RACE | Our largest common stock holding is Ferrari. Over the last three years we have purchased 543,800 shares. At year-end, our investment in Ferrari was valued at $202.3 million. When we started purchasing shares in 2022, we were thinking about what the company would look like in two decades. Ferrari's vehicles will, of course, continue to change over the coming years, but we think the reasons people will choose the brand in the 2040s will be nearly the same as they are today. We believe Ferrari is one such company that has sustained its competitive edge. |
| RMS.PA | Hermès was founded in Paris in 1837 as a maker of harnesses and saddles for Europe's horse-drawn elite. From the outset, the company was defined by functional excellence and craftsmanship rather than fashion. Today, the group is one of the most profitable companies in global luxury, with activities spanning leather goods, ready-to-wear, silk, jewellery, watches and homewares. Despite operating more than 300 stores globally and employing over 20,000 people, Hermès continues to behave less like a conglomerate and more like a craft maison, prioritising long-term brand equity over near-term growth. This mindset underpins why we find Hermès such a compelling business. Its brand equity is built not on seasonal fashion or loud marketing but on function, heritage and longevity. Hermès has delivered exceptional consistency in returns on capital and earnings through cycles, underpinned by disciplined supply, minimal discounting and limited fashion risk. This reduces downside volatility and supports higher through-cycle multiples. The benefits of the Hermès model have been particularly evident through the recent challenging period for the luxury sector. Slowing global demand, softer Chinese consumption and inventory pressure have led to revenue declines and margin contraction for many peers. Hermès has stood apart. Growth has moderated but remained positive, margins have proven resilient, and inventory discipline has been maintained. |
| 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. |
| SHOP | Shopify Inc. is a cloud-based software provider for multi-channel commerce. Shares rose 8.3% in the fourth quarter, finishing 2025 up 51.1% on strong financial results that outperformed Street expectations. The company is demonstrating rapid growth at scale with gross merchandise value (GMV) and revenues each growing over 30% year-on-year. |
| SPOT | Spotify is the world's leading audio streaming platform. Third-quarter results showed continued operating progress, with users increasing 11% to 713 million and subscribers growing 12% to 281 million. Meanwhile, operating income expanded to a mid-teens margin, alongside a record quarterly free cash flow. Despite the momentum, the shares weakened as investors reset near-term margin expectations. Spotify has been a top contributor to long-term Fund performance, and we remain confident that pricing, product innovation, advertising efficiency, and an expanding ecosystem can continue to widen margins over time, as reinforced this quarter by the launch of Spotify recommendations within ChatGPT. |
| 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. |
| WTC.AX | In contrast, the Fund's largest detractors were Pro Medicus, REA Group and WiseTech Global, which declined by 11.5%, 20.3% and 43.3% respectively. |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
|---|---|---|---|---|---|
| No Recent Buys Data | |||||
| Ticker | Put/Call | Amount Sold | Shares Sold | % Change | Weight % | Status |
|---|---|---|---|---|---|---|
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| Industry | Prev Quarter % | Current Quarter % | Change |
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