Three Baillie Gifford funds suffer biggest Q1 losses

The Baillie Gifford American, European and British Smaller Companies funds all found themselves in the list of the ten worst-performing open-ended vehicles during Q1 2022, according to data from Morningstar obtained by AJ Bell.

Liontrust Russia was unsurprisingly the worst-performing fund overall, having lost 63.9%, while Morgan Stanley Global Insight was second from the bottom with a loss of 25.3%. Baillie Gifford American and European lost a respective 22.9% and 23.2%, while Morgan Stanley US Advantage found itself fifth on the list having fallen by 22.3%.

All other funds on the list - S&W Aubrey Global Conviction, Jupiter UK Mid Cap, Baillie Gifford British Smaller Companies, SVM UK Growth and T. Rowe Price Global Tech Equity - lost between 20% and 22% over the three months.

Conversely, Latin American equity funds achieved the best returns over the quarter, with Liontrust Latin America and abrdn Latin American Equity scooping first and second place with respective gains of 28.6% and 27.3%.

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Every other open-ended fund on the top ten list were energy, commodity and gold-focused mandates, with TB Guinness Global Energy in third place with a total return of 27.3%. SVS Sanlam Global Gold and Resources came fourth with a 20.1% total return, while Ninety One Global Gold and TB Amati Strategic Metals bagged fifth and sixth place with gains of 19.4% and 15.5% respectively. ES Baker Steel Gold & Precious Metals, Quilter Investors Natural Resources Equity, LF Ruffer Gold and T. Rowe Price Global Natural Resources Equity won the remaining spots on the top ten list, with total returns ranging from 12.3% to 15.1%.

Laith Khalaf, head of investment analysis at AJ Bell, said Q1 2022 was "clearly dominated by the Ukraine crisis," which led to the poor performance of Russian mandates and the outperformance of energy and commodities-focused funds due to price rises.

"Latin American funds have also benefitted from strong performance from financials in the first quarter, after interest rate rises in Mexico and Brazil," he explained. "The Ukraine crisis has heightened uncertainty for the global economic outlook, and with inflation posing a serious threat to cash and bonds, investors have clearly looked to gold as a safe haven."

Khalaf added that Baillie Gifford's found an "uncharacteristically large number of its fund range" populating the bottom of the performance tables, due to a sell-off in growth and technology stocks.

Investment trusts

On the investment trust side, Baillie Gifford European Growth found itself with the fourth-biggest loss over the quarter at 25.9%, while the Scottish Mortgage came seventh from the bottom of the pack, having fallen by 21.6%.

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"That is actually after a rally in the last month or so, before which, the investment trust was nursing year-to-date losses of around 35%," Khalaf pointed out.

"The trust has a very risk hungry approach to investing, so big drawdowns are part and parcel of what investors can expect from Scottish Mortgage.

"The trust's long-term performance is still exceptional, though it has been riding on a tailwind of stellar growth from tech stocks, and could face more challenging times if that goes into reverse."

The single worst-performing trust over the last three months was JPMorgan Russian Securities, which saw an eye-watering 94% wiped off of its value. British & American lost 43% and Blue Planet investment trust fell by 28.8%. After Baillie Gifford European Growth, Seneca Growth Capital VCT suffered the next biggest loss at 25.4%. Other trusts to have made it onto the list of worst performers include JPMorgan China Growth & Income, SVM UK Emerging, BlackRock Throgmorton and Unicorn AIM VCT, which lost between 20% and 23%.

At the opposite end of the spectrum, Rockwood Realisation - formerly Gresham House Strategic - was the single best-performing investment trust with a total return of 41.5%. Two BlackRock trusts - World Mining and Latin American - came in second and third place with respective gains of 31.6% and 31.1%, while BlackRock Energy and Resources came in sixth place with a total return of 26.4%. Geiger Counter, abrdn Latin American Income Fund and CQS Natural Resources G&I also made it onto the top ten list with gains above 20%, while Gulf Investment Fund, Crystal Amber and Middlefield Canadian Income all achieved gains of between 13.4% and 14.9%.

"Looking forward, inflation and geopolitics look set to dominate proceedings for the foreseeable future, and both have an unsettling effect on markets," Khalaf concluded.

"However that doesn't rule out further advances for markets, seeing as they offer investors a chance of beating inflation in the long term, unlike cash and bonds."