By Jean-Baptiste Andrieux, Reporter, Trustnet, 10 August 2023:
Scottish Mortgage and Edinburgh Worldwide belong to two different sectors but share a range of similarities. Besides being both run by Baillie Gifford, they invest with a global mandate, mix public and private equities and have highly concentrated portfolios. Moreover, they are both currently trading on a near 20% discount and are the cheapest trusts in their respective sector.
The main structural difference is that Scottish Mortgage is predominantly a large-cap portfolio, whereas Edinburgh Worldwide focuses on small-caps and is therefore part of the IT Global Smaller Companies sector.
In spite of this difference, the trusts still have a few holdings in common such as Elon Musk’s SpaceX or British grocery technology firm Ocado. Peel Hunt estimates that the overlap at the stock-level between the two strategies is between 5% and 10%.
David Johnson, analyst at QuotedData, said: “Stylistically speaking there is a huge overlap between these two strategies, a by-product of effectively having the same Baillie Gifford investment DNA running through both of them.
“As a result, they share many of the same weaknesses and strengths, such as tapping into powerful sectoral growth trends, having often idiosyncratic portfolios and also being at the behest of the same market forces (e.g. when growth stocks suffer, expect both trusts to fall in tandem).”
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