Twitter icon Email alerts icon Latest News RSS icon Magazine icon Stay connected:

View the article online at http://citywire.co.uk/wealth-manager/article/a743146

Trust Insider: how Scot Mortgage quietly became the UK's biggest trust

by James Carthew on Apr 01, 2014 at 00:01

Trust Insider: how Scot Mortgage quietly became the UK's biggest trust

The largest fund in the global growth sector and the largest investment company (if you exclude 3i, which I wouldn’t, but it does try to insist it isn't a fund) is now Scottish Mortgage (SM), in market capitalisation terms at least.

Quite when it surpassed Alliance Trust (SM’s market cap is £2.6 billion versus Alliance Trust’s £2.5 billion) I am not sure, but it would have been fairly recently.

Scottish Mortgage got to this elevated position by dint of very good performance – over the past 12 months its asset value is up 24.2% versus an average of 9.2% for its global growth peers. The trust was also able to  eliminate its discount; it is now trading close to asset value and issuing shares.

Remarkable success

Scottish Mortgage is a remarkable success story in the global growth sector. Its long-term performance is superior to any of its peers with the single exception of Law Debenture (which has a significant UK bias in its portfolio and has therefore benefited recently from sterling strength).

It has not been smooth sailing however. The fund was caught out quite badly when the credit crunch hit: the share price fell by more than 60% from its peak. It held its nerve however, and the recovery was almost as dramatic as the fall.

The fund, managed at Baillie Gifford by James Anderson and Tom Slater, aims to outperform the FTSE All-World Index (in sterling terms) over a five-year period. Anderson has been managing the fund since 2000. He was Baillie Gifford’s chief investment officer but stood down from that role in 2011 to concentrate on fund management.

Last year he surprised many by taking a sabbatical over the second half of 2013. Unlike many managers who go off on sabbatical and decide not to return to fund management, however, Anderson was back at his desk in January.

For such a big fund, SM’s portfolio is quite punchy. At the end of February 2014, almost half the fund (47.9%) was invested in just 10 stocks. Below this though there are a further 60 holdings.

Holdings get to be large in the portfolio by outperforming. Anderson lets his winners run rather than trimming them but large holdings can sometimes catch you out.

Sign in / register to view full article on one page

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

News sponsored by:

Sponsored Video: Bringing it all back home


As the UK coalition government strives to rebalance the national economy, so called 'reshoring' looks set to play an increasingly important role in economic recovery.

Today's top headlines

The Citywire guide to investment trusts

Investment trusts have proved to be a highly effective way to invest in the market. Citywire has interviewed the experts to find out more.

Investing for income in a changing environment


With talk on interest rates on the horizon, our latest roundtable debate covers income investing against a changing backdrop

More about this:

Look up the shares

  • 3i Group PLC
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Look up the investment trusts

  • Scottish Mortgage (Ordinary Share)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Alliance Trust (Ordinary Share)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Law Debenture Corporation (Ordinary Share)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

More from us

Archive

On the road

Click here to find out more from the Audience Development team.

Sorry, this link is not
quite ready yet