Baillie Gifford launches four active equity ETFs in US

Edinburgh-based Baillie Gifford has launched four actively managed equity exchange-traded funds in the United States, two of which were converted from existing mutual funds. The products are intended for the firm’s US wealth clients and advisers and to offer a more tax-efficient vehicle for US investors.

The firm manages about USD 260 billion from its Edinburgh investment team and has operated from the city for 118 years. Roughly 40% of its assets are sourced from North America, which the firm cites as a reason for the initial US listing.

The new ETFs are Emerging Markets (ticker BGEG); International Concentrated Growth (BGCG), converted from an existing mutual fund; International Alpha (BGIA); and Long Term Global Growth (BGGG), also converted from a mutual fund.

Baillie Gifford says the ETFs use the same strategies as its mutual funds and separately managed accounts, allowing investors to access portfolios with established track records through an ETF wrapper.

Joe Stellato, head of US Wealth at Baillie Gifford, said, “our clients pay taxes and, in the US, ETFs are more efficient from a tax perspective than their mutual fund cousins.” He added that client demand and tax considerations prompted the conversions and new listings.

Internal analysis cited by the firm found few comparable ETFs using Baillie Gifford’s growth-oriented approach: 10 of 116 in the Emerging Markets category and five in the Global Large Equities classification. The firm is structured as a private partnership with 54 partners who work at the company; the partnership model is noted as influencing investment horizons and stock selection.

While the launch is focused on US distribution, Baillie Gifford expects the ETFs to be available across Europe and Asia as it builds relationships with wealth platforms, multi-family offices, private banks and other providers serving high-net-worth and ultra-high-net-worth clients.