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Scottish Mortgage Trust - Bright Future?

edited 30 November -1 at 1:00AM in Savings & Investments
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Alz1986Alz1986 Forumite
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edited 30 November -1 at 1:00AM in Savings & Investments
Wanted to get some of your thoughts on SMT, which is approaching 1 year I've been invested into. This is a large holding for me, and becoming concerned at its under performance having entered at its peak (bad luck), to my credit I stomached seeing it drop to £4.20 from £5.68, today it finished at £5.10p. I would have thought it touched back close to its peak at least once in the past year, but it hasn't.

I understand its a popular investment, but is it overhyped? They get alot of positive coverage, and I've noticed articles on the Trust never highlight its peak against its current valuation. They are likely now to have a large negative NAV (running last 52 weeks) for a while.

James Anderson talks alot about his good relationship with businesses, I'm getting concerned he may also have a good relationship with the journalists/organisations publishing the articles.

Even when indexes were hitting all time highs in April, SMT was only managing £5.35.

I like James Anderson, hevseems more trust worthy than Neil Woodford who looks more like a betting shop manager than a respected fund manager.

SMT Since hitting its high's of £5.68p per share in late August, and the subsequent global sell off, has never actually recovered. Other funds whether large cap or small, index trackers have recovered and hit new high's.

Their holding in Tesla is an obvious drag along with U.S' ongoing economic war/attacks on China affecting Tencent and Alibaba. Though I like Tesla and believe the future will be more Electric based, I suspected the holding was less about Tesla itself and more about winning a stake in Elon Musks Space X, unfortunately my theory turned out to be right as James Anderson confirms in this recent article

https://citywire.co.uk/investment-trust-insider/news/scottish-mortgage-we-re-great-venture-capitalists-now/a1232883

As for SpaceX Musk isnt planning to go public until they've sent a rocket to Mars, and they'll be doing this in 2024! And thats a big ambition to have, even if succesfull, why would it be worth anything more than Tesla's plunging valuation? In short, no returns will be made from such a relationship for some years atleast, while Tesla's drags the Trust. Couldnt they find somewhere else to invest their clients cash?

Just looking for thoghts on why you all hold onto it, or rate it highly...? As I'm considering selling off and moving money elsewhere due to its 1 year negative NAV.
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Replies

  • ThrugelmirThrugelmir Forumite
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    Why did you buy SMT in the first place? Do the same reasons hold today. A highly concentrated portfolio will be far more volatile than an index with numerous holdings. The core major holdings are unchanged in the time you've held the fund.

    Bottom line is Tesla is burning cash. The money well be made from the battery technology side rather than building cars in the longer term.
    “Buy value, not market trends or the economic outlook. Individual stocks determine the market, not vica versa." - Sir John Templeton
  • SystemSystem
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    Alz1986 wrote: »
    As I'm considering selling off and moving money elsewhere due to its 1 year negative NAV.
    I don't know what you think NAV means, but the usual meaning in finance is net asset value, which is not negative for SMT. An IT with a negative NAV would require the financial genius of Neil Woodford!
  • AnotherJoeAnotherJoe Forumite
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    The FAANGS are down hence SMT is. Tesla also down but I suspect will be back up again this year there's been a lot of FUD against it from people with vested interests but it's share price would appear to be underpinned by a potential Apple takeover or massive investment plus its sales will likely be big this Q and bump the shares back up. Not that I'm bold enough to buy but I think the odds favour a renaissance in their share price.
    However I have to ask why did you buy into SMT? Given it's high tech constituents it was always going to be a roller coaster. If you can't stomach the ride or don't have confidence in tech then sell up and buy something else.
  • ThrugelmirThrugelmir Forumite
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    AnotherJoe wrote: »
    plus its sales will likely be big this Q and bump the shares back up.

    Serially under forecast todate. Hence why the shares continue to drift.
    “Buy value, not market trends or the economic outlook. Individual stocks determine the market, not vica versa." - Sir John Templeton
  • Filo25Filo25 Forumite
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    More than most SMT is a long term investment, Baillie Gifford say as much themselves.

    It will always be a volatile fund, it is based on trying to pick future winners that will make massive returns and that type of portfolio is always going to be vulnerable to having some companies fail completely and companies on high PE valuations which wil be vulnerable to severe pullbacks in down markets.
  • doe808doe808 Forumite
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    Alz1986 wrote: »
    Wanted to get some of your thoughts on SMT, which is approaching 1 year I've been invested into. This is a large holding for me, and becoming concerned at its under performance having entered at its peak (bad luck), to my credit I stomached seeing it drop to £4.20 from £5.68, today it finished at £5.10p. I would have thought it touched back close to its peak at least once in the past year, but it hasn't.

    I understand its a popular investment, but is it overhyped? They get alot of positive coverage, and I've noticed articles on the Trust never highlight its peak against its current valuation. They are likely now to have a large negative NAV (running last 52 weeks) for a while.

    James Anderson talks alot about his good relationship with businesses, I'm getting concerned he may also have a good relationship with the journalists/organisations publishing the articles.

    Even when indexes were hitting all time highs in April, SMT was only managing £5.35.

    I like James Anderson, hevseems more trust worthy than Neil Woodford who looks more like a betting shop manager than a respected fund manager.

    SMT Since hitting its high's of £5.68p per share in late August, and the subsequent global sell off, has never actually recovered. Other funds whether large cap or small, index trackers have recovered and hit new high's.

    Their holding in Tesla is an obvious drag along with U.S' ongoing economic war/attacks on China affecting Tencent and Alibaba. Though I like Tesla and believe the future will be more Electric based, I suspected the holding was less about Tesla itself and more about winning a stake in Elon Musks Space X, unfortunately my theory turned out to be right as James Anderson confirms in this recent article

    https://citywire.co.uk/investment-trust-insider/news/scottish-mortgage-we-re-great-venture-capitalists-now/a1232883

    As for SpaceX Musk isnt planning to go public until they've sent a rocket to Mars, and they'll be doing this in 2024! And thats a big ambition to have, even if succesfull, why would it be worth anything more than Tesla's plunging valuation? In short, no returns will be made from such a relationship for some years atleast, while Tesla's drags the Trust. Couldnt they find somewhere else to invest their clients cash?

    Just looking for thoghts on why you all hold onto it, or rate it highly...? As I'm considering selling off and moving money elsewhere due to its 1 year negative NAV.


    If you dont undertand SMTs approach, then I do suggest you sell.
    Total - £340.00

    wins : £7.50 Virgin Vouchers, Nikon Coolpixs S550 x 2, I-Tunes Vouchers, £5 Esprit Voucher, Big Snap 2 (x2), Alaska Seafood book
  • cloud_dogcloud_dog Forumite
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    OP, don't take this the wrong way but I don't believe there is an issue with SMT but you have a perception/understanding problem.

    The fund is highly concentrated and is a high risk fund due to the investments and concentrated nature. I hold it am am happy to continue to do so.

    You should consider this as a valuable lesson in better understanding your own risk tollerance level.
    Personal Responsibility - Sad but True :D

    Sometimes.... I am like a dog with a bone
  • AminatidiAminatidi Forumite
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    cloud_dog wrote: »
    OP, don't take this the wrong way but I don't believe there is an issue with SMT but you have a perception/understanding problem.

    The fund is highly concentrated and is a high risk fund due to the investments and concentrated nature. I hold it am am happy to continue to do so.

    You should consider this as a valuable lesson in better understanding your own risk tollerance level.

    Tend to agree.

    When I first started investing which was only a year or so back I put a small amount in SMT and promptly freaked out when it dropped 5-10% and sold.

    One of many lessons I've learned in a short time.

    If I were the OP I'd be looking at my tolerance around risk and volatility as SMT will likely make you money over the long term but I wouldn't want to put a bet on how it would act over the short term.
  • tin586tin586 Forumite
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    Thrugelmir wrote: »
    Why did you buy SMT in the first place? Do the same reasons hold today. A highly concentrated portfolio will be far more volatile than an index with numerous holdings. The core major holdings are unchanged in the time you've held the fund.

    Bottom line is Tesla is burning cash. The money well be made from the battery technology side rather than building cars in the longer term.
    economic wrote: »
    I don't know what you think NAV means, but the usual meaning in finance is net asset value, which is not negative for SMT. An IT with a negative NAV would require the financial genius of Neil Woodford!

    It is true that the one year trailing return shows a negative NAV (and share price).
    But look at the 3, 5 and 10 year numbers on something like morningstar (with the usual caveat that past performance is not a guide to future performance).

    If you are clear in your own mind on why you bought it in the first place - and understand its volatility and other risks - then why not carry on holding.

    Personally, I have never bought an IT (including this one) where the share price is at a premium to NAV, but I can understand the fear of missing out.

    Other than the Tesla holding (which apparently is the one thing the managers are always questioned about by investors) I am happy with the holdings. Management is competent. Charges are very competitive.

    So, in summary, if your original investment case still holds, keep on holding. If 1 year performance spooks you, well...
  • AudaxerAudaxer Forumite
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    Alz1986 wrote: »
    Just looking for thoghts on why you all hold onto it, or rate it highly...? As I'm considering selling off and moving money elsewhere due to its 1 year negative NAV.
    Looking at Trustnet, SMT's Total Return is only -2.8% for the last year. At the next correction it could drop a lot more than that, so if you are worried about the high volatility I'd sell up now.
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