Tesla top holding in new Baillie Gifford impact fund

Tesla and Alphabet are among the top holdings in a new fund from Baillie Gifford, which aims to outperform the global stock market while delivering positive social and environmental outcomes.

The Positive Change fund was seeded earlier this year with £5m from the Baillie Gifford partnership and is now open to external investors.

Fund manager Lee Qian, who is focussed on international equities, says they expect rising demand for products and services from companies that are seeking to effect positive social and environmental change and these are “therefore naturally growth companies”.

“By focusing on a subset of those companies that enjoy sustainable competitive advantages and are run by committed management teams, we aim to deliver attractive investment returns over the long term.”

European equities managers Tom Coutts and Kate Fox are also involved in the fund as well as William Sutcliffe for emerging markets, while Julia Angeles focuses on international equities alongside Lee, and Kirsty Gibson is investment manager for US equities.

The team also includes two corporate governance analysts, Kieran Murray and Michelle O’Keefe.

The fund aims to outperform the MSCI ACWI by 2 per cent annually over five-year rolling periods, while also addressing: social inclusion and education; environmental and resource needs; healthcare and quality of life; and economic growth for the billions at the bottom of global income ladder.

Tesla is the largest holding in the fund, accounting for 7 per cent, while 5.7 per cent is allocated to Japanese manufacturer Pigeon and biopharmaceutical company Alnylam Pharmaceuticals, according to the latest fund fact sheet. Alphabet accounts for 4.4 per cent.

The fund currently has 40.4 per cent allocated to North America, 26.3 per cent allocated to Europe ex-UK, 16.9 per cent in developed Asia Pacific, and 15.2 per cent allocated to emerging markets.

Traditionally impact investing has taken place within the realms of private equity and private debt, meaning it is only available to the wealthiest of private investors, such as family offices.

The impact investing market is estimated to be upwards of $114bn, according to the Global Impact Investing Network (GIIN).

Last month the Impact Investment Trust launched on the London Stock Exchange with the aim of opening up the socially-responsible form of investing to the retail market.

Impact aims of Baillie Gifford Positive Change fund

Social inclusion and education

Environment and resource needs

Healthcare and quality of life

Base of the pyramid

Companies that deal with income and wealth inequalities through their products and services; and those who are improving the quality and accessibility of education

Climate change and famine limits the development of nations; companies improving resource efficiency and reducing environmental impact of our economic activities

We are living longer, but not healthier; richer, but not happier. Companies that are actively improving the quality of life in developed and developing countries

Economic growth has led to better living conditions for many but not all globally. Companies that address the aspirational needs of billions at bottom of global income ladder