Baillie Gifford Sustainable Income Class B - Income (GBP)

The fund's performed better than the IA Mixed Investment 40-85% sector average since launch in September 2018. The focus on income means we typically expect the fund to lose less value than peers when markets stumble, but not rise as much when markets rally. We also expect the fund to have fewer ups and downs than the peer group average over the long term.

When it comes to the income paid from this fund, we expect the distributions in pounds and pence to remain relatively consistent and increase over time, but there are no guarantees.

The aim of the fund is to increase the income paid to investors by more than the increase in the consumer prices index over the long term. It uses the IA Mixed Investment 40-85% sector average as a performance comparator.

There are three broad categories of investments in the fund: shares, real assets and bonds. All of the managers look for investments that will contribute to the income paid by the fund, so that it's not reliant on any one asset class to generate its income. This diversification helps the level of income to be more consistent over time. That said, it's expected the bonds will be the largest contributor to the fund's income over time.

The fund invests globally, and is diversified across 200-300 investments. While there is debate and challenge across the team, the individual managers are given authority to select investments from their specialist areas for inclusion in the fund.

Please note that the fund takes its charges from capital which can increase the yield, but reduces the potential for capital growth.

Investors should note that the fund holds shares in Hargreaves Lansdown plc.

There are three broad categories of investments in the fund: shares, real assets and bonds.

The shares portion of the fund is globally invested in large companies that the team expect to be able to pay and grow their dividend a long way into the future. This includes some companies in emerging markets, which are higher risk.

The bonds portion is currently largely made up of corporate bonds and will often include exposure to high yield and emerging market bonds. These bonds usually pay a higher income, however they're also higher risk. The real assets section differentiates the fund from some of its peers and is focused on infrastructure and property.

The team invests in both individual companies and investment trusts in each of these areas. These companies typically have revenues that are linked in some way to inflation, for example property rents that are increased in line with inflation each year. Because of the more consistent and predictable earnings that these companies achieve, their long-term performance is usually more consistent. That said, as company shares they can be volatile at times too.

The amount invested in each asset changes over time. The team's long and shorter-term views on the world influence where they invest. However, over the long term the fund will have roughly a third of its assets in each of the sections outlined above.

The fund applies a screening process to remove companies from their universe that are subject to UN Security Council sanctions or are non-compliant with the UN Global Compact initiative. They also screen out companies that have revenues above particular thresholds coming from fossil fuel extraction and production, thermal coal distribution, tobacco production, controversial weapons and armaments.

In addition to these exclusions, as part of their company assessments, the managers consider a number of different sustainability metrics and assign each company an overall score. This helps them to compare different companies' sustainability credentials. Those that are considered leaders within their sector are preferred.

This sustainability analysis is considered alongside their wider due diligence, which means that the managers don't always have to invest in the highest scoring companies from a sustainability perspective. However, they won't invest in the lowest scoring companies, regardless of how good they may be on other metrics.