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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
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Buyside Digest is not affiliated with, and does not endorse, Baillie Gifford -International Growth. This analysis is provided for institutional research purposes only and is not investment advice.
"Baillie Gifford's International Growth strategy exploits market short-termism to build a diversified portfolio of high-quality growth companies positioned for AI transformation and structural change. Despite recent underperformance driven by indiscriminate SaaS selling, the manager has broadened holdings into pharma, energy, and industrials while maintaining conviction in semiconductor leaders and deeply embedded software businesses."
Baillie Gifford's International Growth strategy delivered strong absolute returns in Q2 2026 but lagged the ACWI ex US index, with disappointing 12-month relative performance that the manager believes does not reflect portfolio fundamentals. The period was marked by an indiscriminate SaaSpocalypse valuation hit beginning in February and strength in AI-related semiconductor hardware. The manager reduced semiconductor exposure by roughly 10 percent of the portfolio since late 2025 while maintaining significant overweight positions in companies with dominant positions across the supply chain. They view many SaaS businesses as likely AI beneficiaries rather than victims and intend to be patient. The portfolio was broadened to include banking, pharma, and energy for the first time in years, adding Roche, TotalEnergies, Sika, and Unicharm as long-duration growth companies trading at compelling valuations. MercadoLibre exemplifies market short-termism, falling 13 percent despite 46 percent growth and once-in-a-generation opportunity. The manager expects continued volatility driven by AI transformation, higher rates, and geopolitical fragmentation, but believes the widening opportunity set and patient active management position the portfolio to deliver strong long-term returns.
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