Scottish Mortgage (SMT)

Scottish Mortgage (LON:SMT) is managed by Tom Slater and the recently appointed deputy manager, Lawrence Burns. Tom succeeds long-standing manager and industry veteran James Anderson, following his appointment as co-manager in 2015 and deputy manager in 2009. As a result, the strategy has not changed. SMT aims to generate superior returns for shareholders through investing in a portfolio of global equities and taking a highly active, long-term approach.

As discussed in Performance, the strategy has performed well over the long term, generating an annualised NAV total return of 20.5% versus the Global sector benchmark of 11%, over a ten-year period. This has resulted in SMT becoming the largest investment trust in the FTSE, benefitting investors through the transfer of exceptionally low fees.

Tom and Lawrence seek companies that can deliver exceptional returns, investing in them during the early stages of development to capture long-term organic growth. As discussed in Portfolio, in recent years, this has resulted in a greater allocation to private companies, which now make up almost a third of the portfolio. Furthermore, the managers invest into new, disruptive technologies, focussed on tackling underlying structural challenges centred predominantly around global digitisation and the internet. They see opportunities to allocate more to manufacturers, especially those aligned with the renewable energy transition, which have exposure to new ‘emerging’ technological centres, such as China.

The managers utilise a Gearing facility which at the current level of 14% is higher than the five-year average of 7.9%. Currently, SMT trades at a Discount of 12.7% and less risk-averse investors may see this as a good entry point.