Fund Research

Scottish Mortgage Investment Trust

Last update 09 October 2019

This is a non-independent marketing communication commissioned by Baillie Gifford. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

Investment objective

Scottish Mortgage aims to maximise total return from a portfolio of long-term investments chosen on a global basis whilst also generating dividend growth.

As at:

01/10/19

Group/Investment

Scottish Mortgage

Ticker

SMT

Management Company

Baillie Gifford & Co

Manager Name

James K. Anderson; Tom Slater;

Association of Investment Companies (AIC) Sector

Global

12 Mo Yield

0.6%

Dividend Distribution Frequency

Semi-Annually

Latest Market Capitalisation

£7,483,295,635

Latest Net Gearing (Cum Fair)

-8%

Latest Ongoing Charge Ex Perf Fee

0.37%

Turnover Ratio

10.01%

Shares Outstanding 

1,484,780,880

(Discount) / Premium (Cum Fair)

-1.61%

Daily Closing Price

504p

Source: Morningstar

Scottish Mortgage (SMT) is a global equity portfolio run with a long-term investment time-frame, via a highly-concentrated, growth-orientated stock picking approach. It is the largest ‘conventional’ UK-listed investment trust with net assets of over £8.3bn. The managers aim to invest in the most promising growth companies across the globe, whether publicly listed or private.

SMT, which is a member of the FTSE 100, has built a long-term track record of outperformance, growing assets at a rate far in excess of its benchmark index and its sector over the past 20 years. The managers’ focus on exponential structural growth opportunities, seeking to identify companies with products that can change and dominate consumers’ spending habits, often leads them to take sizeable long-term positions in often highly volatile stocks, and the portfolio has often been characterised by a strong weighting to technology stocks.

In recent years the managers have identified that an increasing number of companies are seeking to remain privately listed for longer, or even to avoid a public listing altogether. Noting that this often affords management greater freedom to pursue long-term growth opportunities, in alignment with its own investment style, it has sought to incorporate exposure to the private equity market in SMT, and presently holds around 22% (as of 31/08/2019) of its portfolio in unlisted stocks (with a maximum permissible level of 25%).

The reasonably concentrated portfolio, high conviction positions and long-term outlook can often lead to periods of sharp volatility, and the trust has generally been more volatile and exposed to drawdowns than the wider market. James Anderson and Tom Slater, the managers of SMT, believe that the effects of strong management and company growth in their stocks cannot be expected to be realised in less than five years, and tend to look through such short-term volatility.

Scottish Mortgage remains a strongly performing higher-risk option for equity investors, yet is among the cheapest in terms of OCF. The trust has generated higher levels of volatility than the index and peers and is currently on a discount of 2.3%.

Find out how Scottish Mortgage uncovers private markets opportunities

Disclaimer

This report has been issued by Kepler Partners LLP.  The analyst who has prepared this report is aware that Kepler Partners LLP has a relationship with the company covered in this report and/or a conflict of interest which may impair the objectivity of the research.

Past performance is not a reliable indicator of future results. The value of investments can fall as well as rise and you may get back less than you invested when you decide to sell your investments. It is strongly recommended that if you are a private investor independent financial advice should be taken before making any investment or financial decision.

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Fund History: Scottish Mortgage Investment Trust

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