Former Scottish Friendly boss named new chair as Scottish Mortgage Investment Trust continues stellar performance

Scottish Mortgage Investment Trust has announced plans for non-executive director Fiona McBain, formerly chief executive of mutual Scottish Friendly, to become its next chairman at its June 29 annual meeting.

The disclosure was made as the £5 billion trust unveiled a 38.1 per cent total return on net asset value for the year to March 31 in its latest annual results, while its benchmark, the FTSE All-World index in sterling terms, recorded a total return of 33.1 per cent.

The gains for 2016/17 lift total shareholder returns over the last ten years to 302.2 per cent, more than double the 148.7 per cent achieved by the FTSE benchmark.

Perfomance was driven by interest in the trust’s big investments in technology-inspired ‘disrupters’ such as online retailer Amazon, Tesla Motors and Illumina.

Amazon was Scottish Mortgage’s biggest holding at March 31, its £510 million stake in the online seller accounted for 9.5 per cent of the trust’s total assets.

The trust, which is managed by Edinburgh-based Baillie Gifford pair James Anderson and Tom Slater said that it is still positive about the future despite the uncertainties steming from Brexit because it remains globally focused with only a very small exposure to UK markets.

The FTSE 100 global investment trust also underlined its reputation as the UK’s biggest growth fund showing an impressive 40.9 per cent total return to shareholders for the year to 31 March.

Welcoming the latest results, Catharine Flood, client contact for Scottish Mortgage, said: “There are some things make less difference. Brexit is perhaps more important for the British economy. We have a relatively low weighting to British companies. The ones we do hold are very international, globally-focused companies. The exposure to the UK domestic economy is very small.”

Ms Flood added, however, that the impact of the still unknown quantity that is President Donald Trump on the global stage remains a cause for some concern.

She said: “Obviously, as President of the United States, Donald Trump has a significant ability to influence not just his own domestic economy but the global economy.”

This was echoed by outgoing chairman John Scott, who said: “The world can and does change, and sometimes this happens at a faster rate and is more significant than at others. It would be easy to focus on a number of political risks, from President Trump’s unpredictable approach to policy-making, to questions over North Korea’s true intentions, to the escalation of the troubles in the Middle East, but the task of this board is to consider the outlook in the context of the portfolio of Scottish Mortgage. In doing so, it is important to focus on what will actually make a significant difference to the long-run prospects of the companies in which the managers invest.”

On the appointment of Fiona McBain as Mr Scott’s replacement, trust manager James Anderson said: “We are very grateful for John Scott’s guidance as chairman. We have been most fortunate to work for, and with, a board that has helped us enormously and we have every confidence that this will continue under Fiona McBain’s leadership.”

Latest year earnings per share fell 36 per cent to 1.07p, forcing the board to use up nearly all its remaining revenue reserve, which is the pot of undistributed investment income it has earned over the years, in order to declare a final dividend of 1.61p per share up from 1.58p a year ago.

On top of the interim dividend paid in December this raises the total to be paid to shareholders for 2016/17 to 3p per share, up from 2.96p last year.

However, it leaves SMT with revenue reserves of just 0.5p per share, requiring Mr Scott to say that unless there is an unexpected leap in income from the portfolio the board will either have to cut the dividend next year or use its powers to take some money out of its capital reserves to make the shareholder payouts.