When a money manager records 54% growth in assets under management in just one year, huge inflows or M&A activity are typically identified as catalysts.
But for Baillie Gifford Overseas Ltd., neither was the case. Rather, for the Edinburgh-based manager — predominantly running equities at 92% of total AUM as of Dec. 31 — big bets on longtime holdings of technology and high-growth stocks paid off. Assets grew to $430.9 billion as of Dec. 31, with worldwide institutional AUM up 48% to $355 billion. Also somewhat unusually for a large money manager these days, the firm does not offer exchange-traded funds.
The fund's biggest AUM by client domicile was the U.S., at 39.2% of total AUM, and total U.S. institutional, tax-exempt AUM was $88.3 billion as of Dec. 31, up 41.3% for the year.
"Net flows across the whole firm last year, including new clients, was almost exactly zero," said Stuart Dunbar, Edinburgh-based partner. "The common thread of what you're observing there — and I hasten to say as I wouldn't point people to short-term (performance) as a measure of success because it's not — but what you're observing is simply an astonishing run of performance." There were some "moving parts" on the sales and new clients side, "but fundamentally this is just about returns on assets," he added.
In fact, flows over recent years have been at or close to net-zero, including in 2020, as defined benefit clients derisked and rebalanced after achieving strong investment returns, a spokeswoman added. However, those outflows were offset by inflows from other types of clients and investors — leaving investment returns as producing the bulk of AUM growth. Six of the firm's 85 funds are closed to investors, including the £6.1 billion ($8.6 billion) Diversified Growth Fund, the £3.5 billion Japanese Fund and the £2.2 billion Global Discovery Fund.
While the COVID-19 pandemic could not have been foreseen, Baillie Gifford's holdings of stocks including Tesla Inc., Tencent Holdings Ltd. and Alibaba Group Holding Ltd. certainly look fortuitous now — even though they may not have looked so positive when they were first added to portfolios by the predominantly growth equity manager.