Baillie Gifford UK Growth Trust Outperforms FTSE All-Share in H1 2025 Amid Share Buybacks

H1 scorecard: NAV ahead, discount tighter, buybacks doing work

Baillie Gifford UK Growth Trust (BGUK) delivered a punchy six months to 31 October 2025. NAV per share total return came in at 16.2%, nudging past the FTSE All-Share Index at 16.0%. The share price did even better at 17.7% as the discount narrowed to 9.6% by period end.

Management kept the buyback machine humming, purchasing 11,097,159 shares for treasury during the half (8.6% of the starting share count). A further 1,625,737 shares were bought after the period to 26 November (another 1.3%). Net gearing sat at 8% and there were 37 holdings at the period end.

Key metric (to 31 Oct 2025)	Figure
NAV total return (6 months)	16.2%
Share price total return (6 months)	17.7%
FTSE All-Share total return (6 months)	16.0%
Discount to NAV	9.6% (share price 206.0p vs NAV 228.0p)
Net gearing	8%
Shares bought back (H1)	11,097,159 (8.6% of start-of-year shares)
Further buybacks post period	1,625,737 (1.3%)
Net revenue return per share	2.60p (vs 2.78p)
Interim dividend	Not declared (BGUK pays a single final dividend)

What powered returns: winners, laggards and the “not owned” effect

Stock selection did the heavy lifting. On the positive side, Just Group, St James’s Place, AJ Bell and Renishaw stood out. Just Group popped on a takeover at a “reasonable, but not generous” valuation, prompting BGUK to trim and redeploy capital. St James’s Place rallied as its new management’s remediation plan and stronger new business landed well, while a rising market also buoyed AJ Bell.

The headwinds were mostly about what BGUK didn’t own. Banks and Rolls-Royce were strong performers during the half and not holding them detracted. Among larger positions, Auto Trader, Wise and Experian underperformed the market, though the managers say the operations remain solid and they’re “happy holders”.

Portfolio moves: Spirax in, First Derivatives out, selective adds

Transactions were measured. BGUK initiated a new position in Spirax, the engineering group best known for steam management systems. After a post-Covid come-down in its pharma pumps division, the managers see a high-quality business now on a more attractive valuation. First Derivatives was exited following a takeover. The team also added to Kainos and 4imprint on relative weakness and trimmed some larger winners to help fund buybacks.

Top sector exposures at 31 October 2025

• Industrials: 28.2% (Volution, Experian, Wise, Renishaw, Halma, Ashtead, Bodycote, Bunzl, Spirax, PageGroup, FDM)
• Financials: 24.0% (AJ Bell, St James’s Place, Prudential, Legal & General, Lancashire, IntegraFin, Molten Ventures, Just Group)
• Consumer discretionary: 21.7% (Games Workshop, Howden Joinery, 4imprint, Moonpig, Inchcape, Burberry)
• Technology: 15.7% (Auto Trader, Kainos, Softcat, RELX, Wayve – private holding)

Buybacks and discount control: why it matters

The Board tightened the buyback approach in January 2025 with an aim to keep the discount in single figures. It averaged 10.0% over the period and sat at 9.6% at 31 October. Retiring 8.6% of the share count in six months is meaningful: it supports the share price, can enhance NAV per share and signals alignment with investors.

Post-period buybacks suggest the policy remains live. If sentiment towards UK equities continues to thaw, the combination of narrowing market-wide discounts and company-specific buybacks can be a powerful tailwind.

Longer-term record and the 2029 performance tender

Despite a good half, BGUK’s longer-term numbers still trail the benchmark. Since 30 April 2024 (the start date for the five-year tender test), NAV is up 24.4% versus the FTSE All-Share at 24.7%. Over one, three and five years, NAV has delivered 15.2%, 42.2% and 32.5% respectively against the index at 22.5%, 50.9% and 98.6%.

Total return	Since 30/4/24	1 Year	3 Years	5 Years
FTSE All-Share	24.7%	22.5%	50.9%	98.6%
NAV	24.4%	15.2%	42.2%	32.5%
Share price	33.7%	19.7%	49.0%	27.0%

The Board has set out two guardrails: a continuation vote in 2027 and a 100% performance-conditional tender in 2029. If BGUK fails to beat the comparative index over the five years to 30 April 2029, shareholders may tender as much as they wish at a 2% discount to NAV. That’s a useful backstop for investors concerned about the style headwind to growth stocks.

Costs, balance sheet and structure: the plumbing checks out

• Ongoing charges were 0.71% per annum at 30 April 2025, with a 0.50% management fee to Baillie Gifford.
• Borrowings totalled £24.35 million under an unsecured facility; net gearing was 8% after cash.
• Net assets stood at £269.4 million, with NAV per share at 228.0p and the share price at 206.0p.
• Revenue per share dipped to 2.60p; no interim dividend is declared as BGUK pays one final dividend. The last final dividend paid was 5.70p on 12 September 2025.
• Active share is high at 90%, meaning the portfolio differs markedly from the FTSE All-Share – expect returns to diverge from the index, both up and down.

Outlook: growth at reasonable valuations, but style still matters

The Chairman describes the portfolio as a set of growth companies on “unusually attractive valuations” with a weighted average historic P/E around 20x and forecast earnings growth of 7% annualised for the next three years. Many holdings are growing despite a lacklustre UK economy. If the UK’s valuation discount keeps closing and earnings progress continues, that’s a positive setup.

The flip side is clear in the rear-view mirror: BGUK has lagged over longer periods while the market has favoured banks, oil and other value areas. Performance should be best when growth, mid and small caps lead again. Until then, expect some bumpiness.

My take: a better half, real buyback bite, and a credible backstop

Positives first. A 16.2% NAV return with discount control that actually moves the dial is a good story. The buybacks are not window dressing – reducing the share count by 8.6% in six months is serious action. Stock-specific wins like Just Group and the recovery in Renishaw show the team’s patience paying off, and Spirax looks like a classic Baillie Gifford quality-at-a-better-price move.

The negatives are mostly about the broader style tape. Not owning banks and Rolls-Royce hurt, and one, three and five-year NAV returns still trail the index. Revenue income is lower and there’s no interim dividend, so income seekers must wait for the year-end payment.

Overall, if you want concentrated UK growth at a still-wide 9.6% discount, with a manager willing to buy back hard and a 2029 tender backstop if performance disappoints, BGUK is shaping up more constructively. The next leg depends on whether the growth style and UK mid/small caps get their turn. If they do, this trust should have the torque to benefit.