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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Baillie Gifford -Global Alpha 2026 Q3 Investor Letter | Buyside Digest

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Primary Source Intelligence • Q3 2026 Letter Analysis

Baillie Gifford -Global Alpha Quarterly Analysis

Buyside Digest is not affiliated with, and does not endorse, Baillie Gifford -Global Alpha. This analysis is provided for institutional research purposes only and is not investment advice.

Fund Returns

QTD-0.88%

YTD+1.97%

Annualized+10.2%

Positioning StanceCONSTRUCTIVE

Market CapAll Cap

GeographyGlobal

Digest Analysis

Quick Take

"Constructive on durable infrastructure bottlenecks and idiosyncratic global compounders, the fund is redeploying capital into connectivity semiconductors and energy infrastructure while exiting businesses vulnerable to competitive deterioration or pricing pressure."

Executive Summary

During the third quarter of 2026, the Baillie Gifford Global Alpha Equities Fund delivered a net return of -0.88% (Class K, net of fees), lagging the MSCI ACWI Index return of 1.69%. Year-to-date, the fund has generated a net return of 1.97% net of fees compared to 13.37% for the benchmark. Portfolio cash stood at 1.14%, with an Active Share of 77% across 94 holdings. Relative performance was weighed down by short-term weakness in semiconductor-equipment holdings and detraction from select growth positions such as AppLovin, alongside the fund's underweight to low-quality, high-beta cyclical semiconductor names. The manager highlights an unprecedented concentration in global equity markets, with the top ten benchmark holdings tied entirely to the artificial intelligence compute buildout. Hyperscalers are projected to spend over $700 billion on capital expenditure this year. However, rather than chasing temporary windfalls from initial component shortages, the team argues that economics dictates an inevitable supply response, which will shift bottlenecks toward advanced packaging, data movement, power, and data center connectivity infrastructure. Portfolio activity reflected this framework through new purchases in Astera Labs, Cheniere Energy, SoftBank Group, and Bending Spoons, as well as an addition to SK Hynix. Capital was redeployed by completely divesting from Paycom Software, Stella-Jones, and WillScot due to emerging competitive threats from agentic automation, weakened pricing power, and uneven volume recoveries.

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Institutional Meta Strategy

Meta Strategy Gauges

Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.

Signal Matrix

Market Conviction

65%

CautiousHigh

Moderate (65%)

The portfolio maintains high conviction in top holdings such as TSMC (5.94%) and NVIDIA (5.90%), alongside decisive full divestments of underperforming holdings like Paycom, Stella-Jones, and WillScot. However, conviction is moderated across 94 total individual holdings spanning 21 geographic locations and 42 industries. The managers explicitly express willingness to absorb near-term tracking error volatility to back durable, high-quality business franchises over multi-year horizons.

Growth Outlook

55%

BearishBullish

Neutral (55%)

The manager expresses enthusiasm for fundamental earnings compounding and resilient growth across portfolio companies while remaining cautious regarding overall market concentration and fragility. Warnings that the top ten global index stocks are singularly exposed to AI compute spending reflect balanced macro expectations. Valuation multiples for the fund now sit close to index levels, providing an attractive risk-reward asymmetry.

Risk Appetite

70%

DefensiveAggressive

Balanced (70%)

Capital remains almost fully deployed in risk assets with cash held at just 1.14%. The strategy maintains an active share of 77% and embraces differentiated non-index exposure across global markets. The managers continue adding to high-growth opportunities such as Astera Labs and SK Hynix while reducing factor exposure to keep active industry weights strictly within a +/-5% corridor.

Capital Deployment

50%

De-riskingDeploying

Net Neutral (50%)

Cash levels remain stable at 1.14%, indicating a steady, fully invested stance. Capital deployment activity was balanced between funding four new purchases (Astera Labs, Cheniere Energy, SoftBank, Bending Spoons) and completely liquidating three legacy holdings (Paycom, Stella-Jones, WillScot). Net liquidity shifts were minimal over the reporting quarter.

Forward Guidance

65%

CautiousExpansionary

Expansionary (65%)

The team demonstrates clear deployment bias into emerging hardware bottlenecks like data connectivity and packaging while seeking idiosyncratic consumer and industrial compounders. The letter details active rotation out of commoditized or AI-threatened software businesses into higher-quality franchises. Guidance points toward continued selective additions where enterprise growth is neglected by broader index flows.

Language Signal

60%

BearishBullish

Balanced (60%)

Constructive phrasing regarding exceptional opportunities, expanding demand runways, and durable competitive moats balances cautious language about index fragility, dot-com style concentration, and cyclical windfalls. The manager deliberately distinguishes between durable secular compounders and vulnerable high-beta speculative names. Overall tone reflects calm long-term optimism rather than unhedged euphoria.

Perceived Risk

55%

Low RiskElevated

Moderate Risk (55%)

Macro and systemic risks are acknowledged, particularly the acute concentration of equity indices exceeding dot-com bubble levels and the risk of demand normalization among hyperscalers. The manager notes that lower-quality semiconductor stocks could experience steep declines once supply catches up with demand. However, factor risk models indicate that the fund's tracking error has normalized from its 2022 peaks.

Opportunity Density

70%

ScarceAbundant

Abundant (70%)

While broader market breadth has narrowed dramatically to a handful of mega-cap tech hardware names, the manager sees an expanding opportunity set across neglected idiosyncratic global businesses. Four new purchases were completed during the quarter alongside additions to high-conviction holdings across healthcare, industrials, and financials. Valuations outside the crowded AI core are characterized as highly compelling.

Time Horizon

85%

Short-TermLong-Term

Decade+ (85%)

Investment philosophy explicitly anchors on a five-plus year holding period underpinned by an expected annual portfolio turnover below 20%. The commentary emphasizes that current supply shortages will resolve and that long-term competitive durability matters far more than short-term cyclical earnings windfalls. Management repeatedly frames capital allocation around multi-year compounding cycles.