The Biznews Global share portfolio has been turbocharged since its launch almost three years back, generating a return of 30% a year. The stock picks have been focused, primarily, on exponential companies. Our portfolio, it turns out, bears an uncanny resemblance to the hottest investment option in Scotland – an ancient fund that has mushroomed through its new age approach.
My Biznews colleague Jackie Cameron took a closer look, and writes: “Ask astute Scots what the best investment is in Scotland and it is likely that they will point you in the direction of the Scottish Mortgage Investment Trust among their favourite options. As a result of this vehicle popping up periodically in conversations about investing, I decided to take a closer look at the flagship Baillie Gifford fund.
I soon realised why the London-listed investment vehicle (LSE:SMT) is one of the UK’s most popular investment trusts. It has built up roughly £5bn in assets under management by giving its investors serious bragging rights.
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Its fund fact sheets reveal that the Scottish Mortgage Investment Trust share price delivered more than 50% growth over one year to the end of May, almost 100% over three years and more than 200% over five years. Put another way, discrete annual performance has ranged between about 18% and 40% over the past five years, though 2015-2016 registered a dismal -0.7%. It has outpaced the FTSE All World benchmark by a wide margin.
There’s very little that’s Scottish about this fund, which has been around for more than a century and is managed from Edinburgh. From its roots as a credit supplier to colonial rubber estates, the Scottish Mortgage Investment Trust has continually been reinvented to tap into the trends of the day.
Its current top 10 holdings reflect a big bet on the beasts of the global technology jungle – on the other side of the world. Almost 10% of the fund is invested in Amazon, which continues to power its share price by announcements that it is cannibalising ever greater chunks of the global retail sector.
Next biggest holding is Tesla, the clean energy car company founded by South African-born Elon Musk that is growing in the US and China. That stock makes up nearly 8% of the portfolio.
Third on the list is Tencent, the Chinese technology company that underpins South African giant Naspers. As if that’s not enough tech firepower, Scottish Mortgage Investment Trust has healthy weightings of Alibaba and Facebook – each around roughly 5% of the portfolio – and Google parent company Alphabet (just under 4%) among its biggest bets.
Looking at the geographic asset allocation of this trust, it is even clearer that the Scottish Mortgage Investment Trust has little invested in UK assets let alone companies that have a link to the Scottish economy. Not far off half the fund is invested in North American stocks. Of the 30% devoted to European shares, less than 4% is held in UK stocks. The same portfolio weighting is given to Asia and the Eurozone, at approximately 20% each.
The Scottish Mortgage Investment Trust is one of many vehicles available to investors who would like to invest in the global technology giants that are disrupting industries from retail and advertising to transport. But if you’re looking for a London-listed fund that might withstand the market lows, has a chance of delivering higher-than-average returns and a steady dividend, it doesn’t seem to be too late to consider the Scottish Mortgage Investment Trust for your global portfolio.
It entered the blue-chip FTSE100 this year, reflecting positive investor sentiment about its likely future performance. And, as Brexit blues weigh heavily on the value of Sterling, a fund like the Scottish Mortgage Investment Trust could receive an extra boost through US dollar strength.”
Thanks Jackie. Nice to know the Biznews Global Share portfolio is in such good company.
