Smith, who after his replacement as Monks manager in 2015 by Charles Plowden became head of Baillie Gifford's multi-asset and fixed income teams, is running the new fund alongside Scottish American (SCAM) manager James Dow and bond manager Steven Hay.
The fund launched to little fanfare earlier this month and is not expected to be actively marketed to investors until the new year. It has been seeded with £30 million from existing investors and carries an ongoing charge of 0.6%.
The launch marks a strengthening of Baillie Gifford's 'multi-asset' offering, an area of the fund market where the group has seemed reluctant to follow the aggressive expansion of rivals.
Multi-asset funds are those which can invest across all asset classes, mixing shares with bonds, property, commodities and others in a bid to offer investors a 'one-stop shop'.
The group's £6.9 billion Diversified Growth fund was launched a decade ago but has been targeted at institutional investors.
Baillie Gifford launched the similar Multi-Asset Growth fund for retail investors at the end of 2015. Since its launch, the fund has returned 17%, placing 100 of 129 funds in the Investment Association's Specialist sector.
Felix Amoako, who works on the Diversified Growth fund, is supporting the new fund's trio of managers, alongside Nicoleta Dumitru.
The Multi-Asset Income fund will invest in global equities, property, infrastructure and bonds and the portfolio cutrrently carries a forecast income of around 4%.
Unlike the Multi-Asset Growth fund, which secures equity exposure by investing in other Baillie Gifford funds, it will invest directly in shares.
Smith's return to retail fund management, meanwhile, highlights the shift in his career since handing over the reins of global investment trust Monks.
He cut his teeth in Asian equities, taking on the Baillie Gifford Pacific fund and Pacific Horizon (PHI) investment trust in 1995, before taking on Monks in 2006 and becoming the group's chief investment officer in 2011.
But Monks' performance suffered as Smith was held back by an overly defensive approach in the post-financial crisis environment, out of kilter with the aggressive pursuit of growth that has become the hallmark of Baillie Gifford's equity investing, shown most notably by the top-performing Scottish Mortgage (SMT) investment trust.
Six months after being replaced on Monks, Smith, a Baillie Gifford partner, made the transition from equities to head up multi-asset and fixed income investment for the group.