Assets under management at Baillie Gifford plunged by more than a third last year as growth stocks fell out of favour and de-rated in the face of rising interest rates.

Funds at the Edinburgh-based asset manager fell by a record £113bn to £223bn over the 12 months to 31 December, the steepest fall on record, according to a report by the FT citing figures from the firm.

The fall was mainly driven by a fall in the value of the partnership’s investments – tilted towards US technology stocks, which suffered heavily in 2022 – with net client outflows accounting for just £20bn, or 18%, of the loss in assets.

It came as the Nasdaq composite index, which is heavily weighted towards the US technology sector, also fell by around a third last year, while the S&P 500 fell over 19%.

This followed a steep sell-off early last year, promoted by a turn towards hawkishness on inflation by the US Federal Reserve and other central banks, ending the flood of new money which had propelled the valuation of growth stocks upwards for more than a decade.

Alongside government stimulus during the coronavirus crisis, which saw the group’s assets grow by more than £100bn over the course of 2020, the favourable environment for growth drove assets at Baillie Gifford from £22bn at the end of 2000 to £336bn at the end of 2021.

Fund managers at the firm have sought to reassure investors that their search for the small number of long-term extraordinary growth stocks such as Amazon and Tesla will recover.

Last month the fund managers of Baillie Gifford US Growth (USA ), an investment trust whose shares soared over 133% in 2020 but have more than halved in the past 12 months, told investors: ‘We understand that weak performance is challenging for shareholders to endure but we can assure you that we remain confident in, and committed to, our approach.’

Scottish Mortgage (SMT ), the partnership’s FTSE 100 listed global flagship, has sufferered a similar slump but, with a market value of £11.4bn after the New Year rally, remains the UK’s second biggest investment trust after the £15.9bn private equity giant 3i Group (III ).