Baillie Gifford has closed three of its UK government bond funds, according to its inaugural Assessment of Value (AoV) report, which found two of the products - the Baillie Gifford Active Gilt and Active Long Gilt funds - failed to consistently meet their investment objectives.
The report - which requires firms to conduct a value assessment of their funds outlining seven criteria including costs, economies of scale and performance - found that a further five of Baillie Gifford's 37 funds either provided value after action was taken or are being monitored closely.
These were the Baillie Gifford British Smaller Companies, Emerging Markets Bond, Investment Grade Bond, Sterling Aggregate Bond and Sterling Aggregate Plus Bond funds.
Baillie Gifford overhauled the portfolio, management team and investment process of its £174.8m British Smaller Companies fund after "disappointing performance", whereby it failed to meet its objective in relation to its benchmark over five years.
Since the changes were put in place and co-managers Charlie Broughton and Steve Vaughan took to its helm in May, the firm has been "very encouraged" by its recent performance.
However, it will "continue to monitor progress in case further action is required".
Meanwhile, its £284.5m Emerging Markets Bond fund, which has been managed by Sally Greig and Yannis Lykouris since 2008 and 2016 respectively, underperformed over three years to the end of March 2020.
This was partially due to its position in Argentina, and changes to its investment process were subsequently put in place. Given the fund's low OCF of 0.56% among other criteria, the firm found the product provided value overall but will be monitored.
The £170.8m Baillie Gifford Investment Grade Bond fund, which has been managed by Paul Dilworth since the start of the year, suffered a torrid performance during Q1 2020 and therefore underperformed its benchmark over three years to the end of March.
"No immediate action has been taken" due to the short period of underperformance, according to the firm, but it will be monitored.
Baillie Gifford Sterling Aggregate Bond and Aggregate Plus Bond funds suffered similarly during Q1 2020, and therefore underperformed over three years and will also be watched closely.
The remaining 30 funds were all found to provide good value.
Michael Wylie, chair of Baillie Gifford, said long-term performance for most of the funds "remains very strong" and that many of the firm's equity funds have been "exceptional when compared to their ambitious outperformance targets and their peers".
"Our investment teams have recognised radical changes taking place in parts of the economy and have successfully identified companies that will benefit from these dynamics," he explained.
"This has been particularly impressive given the recent volatility of markets and the high volume of political and economic noise."