Outperformance in a Transformative Era
Baillie Gifford US Growth Trust has delivered a standout performance, with its share price surging 24.5% in the year to 31 May 2025. This isn’t just a win—it’s a decisive victory over the S&P 500, which returned a modest 7.2% in sterling terms. The trust’s NAV also climbed 22.1%, reinforcing the strength of its high-conviction approach. What’s behind these numbers? A blend of patience, private market access, and positioning at the bleeding edge of technological disruption.
The Engine Room: Private Innovation
Nearly 35% of the trust’s £780.9 million portfolio is anchored in unlisted companies—a deliberate bet on tomorrow’s giants. Three new private additions joined the roster:
- Rippling (workforce management): Automating HR and IT operations for scaling businesses.
- Runway AI (generative video): Democratising Hollywood-grade content creation.
- Cosm (immersive entertainment): Building LED-dome venues for shared reality experiences.
Portfolio turnover remained low at 9.1%, reflecting Baillie Gifford’s trademark patience. As co-managers Gary Robinson and Kirsty Gibson put it: “Success rarely unfolds smoothly. Our focus is on resilient, adaptable companies underpinned by structural growth drivers.”
Public Market Pivots
While private bets drew headlines, the listed portfolio saw shrewd rotations. Five new positions emerged:
- DraftKings (sports betting): Capitalising on US online gambling deregulation.
- Globant (IT services): Bridging the AI adoption gap for traditional businesses.
- Lineage (cold storage logistics): Consolidating a fragmented $200bn industry.
- SharkNinja (consumer appliances): Innovation at accessible price points.
- The Ensign Group (healthcare facilities): Scaling skilled nursing via acquisition.
Exits included 10X Genomics, Coursera, and HashiCorp—cases where “investment theses didn’t play out as expected.” Notably, managers trimmed NVIDIA and Tesla after their Trump-reflation rallies, recycling capital into fresher opportunities.
The Builder’s Mindset: Culture as Competitive Edge
Portfolio managers Robinson and Gibson distilled their philosophy into a powerful metaphor: “CEOs are architects. Foundational culture is their steel reinforcement; created culture shapes the daring structures above.” They spotlighted holdings exemplifying this:
Case Studies in Reinvention
- Shopify: Exited logistics to embrace AI, developing “declarative software” that lets merchants command complex tasks via plain English.
- CoStar: Transformed from a property data vendor into a real estate marketplace by acquiring Apartments.com (now a $1bn+ revenue business).
- SpaceX: Progressed Starship tests, aiming to slash launch costs further and unlock space commerce.
This builder ethos extends across the portfolio—DoorDash expanding beyond food into local commerce, Stripe integrating stablecoins for cheaper cross-border payments, Duolingo using AI tutors to democratise language learning.
AI: Not Just Hype, But Hardware and Workflows
The managers see AI’s impact broadening beyond hype cycles: “We’re seeing tangible productivity gains—particularly in software, finance, and professional services.” Their approach spans the AI stack:
- Infrastructure: Amazon (AWS) and Cloudflare (edge computing)
- Data: Snowflake and Databricks
- Application: Runway AI’s creative tools
Critics might ask: “Why not just buy an S&P 500 tracker?” The retort is sharp: “Indexing gives cheap exposure to incumbents; we back transformers.” The closed-end structure allows pre-IPO stakes in companies like SpaceX and Stripe—impossible for passive funds.
Discounts, Discipline, and the Road Ahead
The trust narrowed its discount from 11.2% to 9.4% over the year, buying back 16 million shares (£35.5m). Gearing remains conservative at 4%. No dividend was declared—unsurprising for a capital growth vehicle.
Chair Tom Burnet struck an optimistic note: “Technology reshapes entire industries. Patient capital lets us participate in this transformation.” With AI accelerating and builders thriving amid volatility, Baillie Gifford US Growth seems poised to keep riding America’s innovation wave.
A Final Thought
In an era of political noise and tariff tantrums, this trust bets on something more durable: foundational company culture. As the managers note: “America’s greatness is built brick by stubborn brick by founders who see the city not as it is, but as it ought to be.” That’s a thesis worth holding through turbulence.
