David Brenchley, The Sunday Times, Sunday March 26 2023:
A boardroom bust-up and the resignation of its chairwoman has compounded issues at Scottish Mortgage, the UK’s second-largest investment trust whose shares have more than halved in 16 months…
What happened?
A row erupted on March 17 when in remarks made to the Financial Times, Amar Bhide, a non-executive director, questioned the independence of Fiona McBain, who has been on the board since 2009 and is its chair…
What does Scottish Mortgage invest in?
Scottish Mortgage’s factsheet says it aims to “identify, own and support the world’s most exceptional growth companies”.
“We aim to provide long-term funding and support for the companies and entrepreneurs building the future of our economy,” it says…
Why has it done so well?
The former manager James Anderson transformed Scottish Mortgage from 2000 by investing in more global stocks…
What went wrong?
The companies in which Scottish Mortgage invests have been punished since interest rates started rising…
Scottish Mortgage has a self-imposed limit of 30 per cent in private companies. Being at this limit means that it cannot make new investments in unlisted firms, thereby missing out on opportunities.
What should investors do?
Investors who bought shares in Scottish Mortgage before 2020 should at least be sitting on a profit. Newer investors will have had a different experience.
Think carefully, though, before you cut your losses. “If you are planning a switch, the big question is do you stick with a growth-focused approach?” said James Carthew from the research house QuotedData. If and when interest rates are cut, growth stocks could rally, he said.
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