By Tom Aylott, Reporter, Trustnet, 27 June 2023:
The Scottish Mortgage Investment Trust made some of the industry’s biggest returns by investing in high-growth assets over the past decade, yet volatile market conditions have halved its share price from its peak in November 2021.
It is the best performing trust in the IT Global sector over the past 10 years, climbing 357%, whilst also beating all but one (Morgan Stanley Global Opportunity) of the 229 funds in the open-ended IA Global peer group.
Scottish Mortgage certainly delivered over the long term, but its 55% drop in share price from its peak over the past 19 months may leave investors confused – is now an opportune moment to buy a strong trust at a large discount, or time to sell out before it drops further?
Although it was a “painful” holding for shareholders in recent years, Ewan Lovett-Turner, director at Numis, said that it still deserves a place in investors’ portfolios.
He said Tom Slater and Lawrence Burns’ all-out-growth approach to investing “stands apart from almost all other” strategies, making its current discount of 19% particularly favourable for investors with long-enough time horizons…
Indeed, QuotedData head of investment company research James Carthew agreed that the discount has become “too wide,” although this is because its 29.9% allocation to private equity has become too excessive.
“It likely reflects uncertainty in investors’ minds over the value of its unlisted investments, which are too large a proportion of its portfolio,” he added.
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