Monks has a wider focus than Scottish Mortgage as it is not entirely tech or new-economy focused, but it does deploy the growth style of investing that is the hallmark of the company.
Mick Gilligan, who runs the model portfolio service at Killik and Co and also tends to focus on investment trusts, says: “I don’t think this is about size. I think it’s simply about an investment style that is currently on the wrong side of a very aggressive market rotation.
"The rise in market interest rates has led to higher market discount rates and a reappraisal of the value of future profits. The most heavily impacted investments in this type of environment are stocks where: a) the profits are far in the future; and b) those profits are more uncertain than for the average stock.
"This describes Baillie Gifford portfolios quite well and Scottish Mortgage in particular. I still see merit in holding these types of investment, but I think the level of exposure in portfolios should be relatively low right now.”
Anthony Leatham, investment trusts analyst at Peel Hunt, says: "We certainly point to style as being the leading cause of this drawdown.
"While some of the trusts managed by Baillie Gifford are large and the firm itself has experienced strong growth in funds under management over recent years, there are measures in place to prevent size from being an issue.
"For their trusts, the closed-ended fund structure suits the investment approach which is long term in nature and has, on average, seen portfolio turnover of between 10 per cent to 20 per cent, implying an investment horizon of five to 10 years.
"One of the other benefits of size is the investment in people and systems and the trusts benefit from this deep and experienced manager and analyst resource, as well as the network effect that comes from being such a well-regarded growth equity investor."
Data from Morningstar shows the Baillie Gifford American fund, which is managed by some of the same team as the Scottish Mortgage trust, had outflows of more than £400m in the three months to the end of January 2022, and has shrunk by £3bn since the end of November 2021 to £4.3bn in size.
Another mandate to suffer sustained outflows is the company's Managed fund, which shrank by £1.2bn in the month of January alone, while the Diversified Growth fund lost about £600m.
Baillie Gifford's Global Discovery – a small and mid-cap mandate that returned 78 per cent in 2020 but lost 19 per cent in 2021 and has lost 23 per cent since the start of this year – has shrunk in size by around £400m since November 2021.
