BlackRock most exposed UK-domiciled fund to SVB and Baillie Gifford range to its customers

The sudden decline of SVB sent shockwaves through global markets, and the sale of SVB UK to HSBC for £1 catalysed a sell-off in European banks, which fell almost 6% on 13 March.

On the same day, the FTSE 100 dropped by 2.3%, while in the US the Dow Jones and S&P 500 dipped by 0.8% and 0.7%, respectively.

HSBC buys SVB UK as regulators back US deposits

The breakdown of the California-headquartered bank led to analysts predicting a pause from central banks in future rate hikes, just a week before the Federal Reserve, Bank of England and European Central Bank were all due to announce the next interest rate step.

Since then, the volatility created by Credit Suisse has seen experts make further calls for the central banks to hold off on rate hikes, for fears the companies were too vulnerable. However, the ECB still went ahead with its planned 50bps hike last week (16 March).

As the aftermath of SVB’s collapse unfolds, Investment Week examined which portfolios had the biggest exposure to the SVB and its customers.

The analysis also focused on fund performance between 9 and 13 March 2023, from when SVB fell to when its UK arm was sold, and included UK-domiciled portfolios only.

Data from Refinitiv revealed that a BlackRock ETF had the greatest exposure to SVB itself, while Baillie Gifford funds and trusts had the largest exposure to the bank’s customers.

UK-domiciled funds with more than 1.5% exposure to SVB

BlackRock Future Financial and Technology ETF had 4.5% of its portfolio in the bank as of 28 February 2023, according to data from Refinitiv.

Liontrust Global Innovation fund was the second most exposed fund to SVB (2.9%). Its performance saw a significant dip following the bank’s collapse, down 9% between 9 and 13 March, according to data from FE fundinfo.

Two abrdn funds made the list as well – the abrdn American Equity fund (2.4%) and the abrdn American Unconstrained Equity fund (2.2%).

The former’s performance dropped by 7.5% over the five-day period, while the latter was down by 7.2%.

All the companies that had direct exposure to SVB either declined or did not reply to a comment request.

Roblox

In regards SVB customers, online gaming platform Roblox – which did most of its banking with SVB – was the company most funds and trusts were invested in, according to data from Refinitiv.

Funds and trusts with more than 2% exposure to SVB customers

Baillie Gifford had the highest number of funds and trusts exposed to the company, with seven products holding greater than 1.5% exposure: Baillie Gifford American fund (2.1%); Baillie Gifford Worldwide US Equity Growth fund (2.1%); Baillie Gifford US Equity Growth fund (1.9%); Baillie Gifford Worldwide Long Term Global Growth fund (1.8%); Baillie Gifford Long Term Global Growth Investment fund (1.8%); Baillie Gifford US Growth Trust (1.7%) and Baillie Gifford Long Term Global Growth fund (1.6%).

‘This time is different’: SVB collapse symptom of easy money rather than systemic banking issues

Similarly to the funds and trusts invested in SVB, those exposed to Roblox also saw performance dips between 9 and 13 March.

Baillie Gifford Long Term Global Growth Investment was down 6%; Baillie Gifford American fell by 9% and Baillie Gifford US Growth Trust lost 6.8%.

The T Rowe Price Global Technology Equity fund was also among the most exposed to Roblox (3.2%), and saw performance drop 6.3% over the five-day period.

Ambarella

Semiconductor company Ambarella was the SVB customer to which UK funds and trusts held the second heaviest exposure.

Janus Henderson Sustainable Future Technologies fund (3.4%) and Janus Henderson Horizon Sustainable Future Technology fund (3.3%) were the top two holders, followed by Baillie Gifford US Discovery fund (3.1%) and TB Amati Strategic Innovation fund (2.6%).

Janus Henderson Sustainable Future Technologies’ performance was impacted over the period, falling 5.1% over the five days.

When asked about his stance on Amati’s exposure to Ambarella, Mikhail Zverev, co-manager of the TB Amati Strategic Innovation fund, told Investment Week holding the company had been “both profitable and cash generative”.

He said the semiconductor business originally had a $17m deposit with SVB, but it had since withdrawn all its funds from the bank. As a result, he said: “There is no impact on the company, and we see absolutely no reason whatsoever to change our position”.

Further exposure

Other SVB customers of note include digital media manufacturer Roku, biotechnology business Ginkgo Bioworks and digital healthcare company iRhythm Technologies.

Baillie Gifford had the most exposure to Roku with three funds and one trust invested in it – the Baillie Gifford American fund (1.4%); the Baillie Gifford Worldwide US Equity Growth fund (1.4%); the Baillie Gifford US Equity Growth fund (1.2%) and the Baillie Gifford US Growth Trust (1.1%).

SVB collapse sends ‘wake up call’ to UK VCTs and start-ups

The asset manager also had exposure to Ginkgo Bioworks via the Scottish Mortgage Investment Trust (1.7%) and The Schiehallion fund (1.1%).

Other funds and trusts invested in the biotech company included the Baillie Gifford US Growth Trust (1%) and the BANOR SICAV – Rosemary, which had 1.1% of its portfolio in the company.

Four UK funds were exposed to iRhythm Technologies, namely the Polar Capital Healthcare Discovery fund (1.4%), L&G Healthcare Breakthrough UCITS ETF (1.4%), Legal & General Robotics and Automation Index (1.2%) and L&G ROBO Global Robotics and Automation UCITS ETF (1.2%).

While most asset management firms either declined or did not reply to a comment request on their exposure to SVB customers, several managers shared positive attitudes on the bank’s depositors.

They said announcement by US regulators that the companies’ money would be safe was reassuring and they did not have many worries regarding their positions with the bank’s customers.