Scottish Mortgage Investment Trust continues to defy critics

James Anderson

This was ahead of a 10.7 per cent total return on its benchmark, the FTSE All-world Index in sterling terms.

The fund, which is managed by James Anderson and Tom Slater, cited its patient, long-term approach for the expectation-beating performance.

The Edinburgh-based vehicle said the ethos sands in contrast to “a frantic world, obsessed with predicting the next ‘thing’, which might go wrong”.

An underlying 14.6 per cent total return on net assets underpinned a 16.5 per cent total return for Scottish Mortgage shareholders, beating the 10.7 per cent gain from the FTSE All-World index.

This takes the 10-year total shareholder return to 737 per cent, more than three times the return investors could have got from the stock market benchmark.

Scottish Mortgage’s biggest holding at March 31, online retailer Amazon, delivered a 32.4 per cent return.

The Amazon stake accounted for 9.6 per cent of the trust’s £8.1bn of total assets at March 31.

SMT’s holding in Jeff Bezos’ sprawling $900 billion web services giant, grew returns by 32.4 per cent,

The fun’s second largest holding, in gene sequencer manufacturer Illumina, a 7.5 per cent position, saw returns rise 41.5 per cent.

Kering, the French luxury goods retailer behind Gucci and Yves Saint Laurent, generated a 41.4 per cent return.

The fund also confounded critics who predicted a reduction in its support of controversial tech entrepreneur Elon Musk by upping their holding in Tesla, his electric car company.

SMT raised its position in Tesla to 5.3 per cent from 4.6 per cent in the second half of the year, maintaining it as the portfolio’s fifth largest holding.

Accounts show the fair value of the stake increased from £344 million in September to £428 million at the end of March and contributed to the trust’s strong performance in the previous 12 months.

Scottish Mortgage’s success also saw the trust issue over £400 million of new shares during the year.

Trust chair Fiona McBain said: “Today, Scottish Mortgage has perhaps become best known for its holdings in the tech giants but investors are cautioned that defining the portfolio in such terms gives too narrow a perspective on this company’s prospects.

“The portfolio not only includes retail, advertising and media businesses but also a wide variety of companies in healthcare, manufacturing, transportation, financial services, food production and consumption.”

On Brexit, Ms Mcbain said “there are very few UK companies in the portfolio, five holdings representing around 3 per cent of assets, most of which are global rather than purely domestically focused businesses”.

The trust proposed a final dividend of 1.74p a share, making a total of 3.13p for the financial year.