Can Scottish Mortgage keep climbing? Tom Slater interview

Hugely popular investment trust Scottish Mortgage shrugged off a year like no other to more than double its army of small investors’ money in 2020. 

As investors weigh up whether it can keep climbing after such stellar recent performance, we speak to Scottish Mortgage’s Tom Slater on the Investing Show to discuss the past 12 months and the future.

This is Money’s Simon Lambert asks whether the coronavirus pandemic led its managers to consider a change of tack or renewed their enthusiasm for its long term holdings, and where they see the best opportunities for the decade ahead.

Scottish Mortgage’s share price climbed 105 per cent over the past year, spurred on by the performance of holdings including US stars, Tesla and Amazon, and China’s Tencent and Alibaba.

This came on top of the strong performance that has seen Scottish Mortgage gain 421 per cent compared to the AIC global sector trust average of 187 per cent over five years.

Such gains spell good news for investors looking in their portfolio’s rear view mirror, but pose important questions of whether history can be repeated – or at least continue to rhyme – for Scottish Mortgage in the future. 

Meanwhile, the big share price rises and high profiles of some of Scottish Mortgage’s holdings lead to comments that such stocks must be difficult to manage.

How do you cope with a company like Tesla being 9 per cent of your portfolio, for example? And what does Tesla have to do to justify the valuation investors have put on it.

Scottish Mortgage’s share price has more than doubled over the past year as the global trust and its holdings shrugged off the coronavirus pandemic

We asked Mr Slater about this and the manager explains the trust’s continuing long-term investments in Tesla and Amazon – but sale of Facebook – as well as the potential growth it sees in Chinese electric carmaker Nio and a more old-school motoring icon in Ferrari.

Scottish Mortgage dates back to 1909 and has grown to £18.8billion in size, holding stock market listed companies from around the world – with a particular focus on the US and China – along with its recently built up portfolio of unlisted companies.

But that big list of companies masks a relatively concentrated and highly active portfolio. 

Many of Scottish Mortgage’s holdings account for only small positions, whereas the trust’s top ten amounts to 48.3 per cent of the portfolio and the top 37 holdings of 0.7 per cent or above accounts for 84.6 per cent.

Among the holdings below the top ten are well-known names including the aforementioned Ferrari, along with Netflix, Spotify, Wayfair, NVidia, ByteDance, Zoom and Covid-vaccine maker Moderna.

Mr Slater says this list shows that although Scottish Mortgage is often characterised as tech-heavy, the trust should be seen as targeting companies in a variety of sectors using technology to improve what they do.

Scottish Mortgage 

Managers: James Anderson and Tom Slater 

Size: £18.8billion

Ongoing charges: 0.36%

Premium / discount: +0.36% 

 Performance vs global sector ave:

One-year: 105% vs 42.9%

Three-year:  166.5% vs 77.4%

Five-year: 421.3% vs 188.6%

Ten-year: 851.5% vs  318.8%

Scottish Mortgage investment trust’s top ten holdings at the end of 2020