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Scottish Mortgage Trust - Bright Future?

edited 30 November -1 at 1:00AM in Savings & Investments
55 replies 7.3K views
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  • edited 11 July 2019 at 5:36PM
    SeniorSamSeniorSam Forumite
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    edited 11 July 2019 at 5:36PM
    Iglad ....... Smart move into LTG , I have been in there since April and have growth of 25.32% and with FS since June with growth of 17.61, so well pleased
    I'm a retired IFA who specialised for many years in Inheritance Tax, Wills and Trusts. I cannot offer advice now, so my comments are just meant to be helpful.
  • badger09badger09 Forumite
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    bowlhead99 wrote: »
    Seems quite a radical solution to move money out of a dedicated China fund into two global funds which each allocate 0% to shares in Chinese companies.

    Although you are right the returns will probably be steadier.

    One solution to being bored of staring at a loss is simply to imagine you had bought at today's price, or some other lower price, so that as of today, it isn't a loss. The fund itself doesn't really know or care what price you bought it at.

    Another is to stop staring at it;)
  • SeniorSamSeniorSam Forumite
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    I very nearly invested in SMT, but after reading a lot more about Musk, decided that his attitude to business was not for me. I am surprised that he has had so much backing but SM cannot back out now and must continue to support it, as they do in all their video's. I don't feel that they will prove as good as expected and would not go near them myself.
    I'm a retired IFA who specialised for many years in Inheritance Tax, Wills and Trusts. I cannot offer advice now, so my comments are just meant to be helpful.
  • MPNMPN Forumite
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    SeniorSam wrote: »
    I very nearly invested in SMT, but after reading a lot more about Musk, decided that his attitude to business was not for me. I am surprised that he has had so much backing but SM cannot back out now and must continue to support it, as they do in all their video's. I don't feel that they will prove as good as expected and would not go near them myself.

    Tesla is only one holding in SMT (I think it’s about 6%) so I personally wouldn’t choose my investment strategy because of one poor choice of a holding. SMT also invest in many very good companies and always seem to eventually rebound after some big falls in the share price.
  • ThrugelmirThrugelmir Forumite
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    MPN wrote: »
    Tesla is only one holding in SMT (I think it’s about 6%) so I personally wouldn’t choose my investment strategy because of one poor choice of a holding. SMT also invest in many very good companies and always seem to eventually rebound after some big falls in the share price.

    Around 10% in Amazon. A company I've never been keen on from a personal perspective. Lack of ethics.
    “Buy value, not market trends or the economic outlook. Individual stocks determine the market, not vica versa." - Sir John Templeton
  • ArchBairArchBair Forumite
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    Thrugelmir wrote: »
    Around 10% in Amazon. A company I've never been keen on from a personal perspective. Lack of ethics.

    Agree about the ethics point of companies like Amazon but as MPN said, SMT do continue to rebound from a low share price to a high one so its not a bad IT to invest in but certainly not for the faint hearted!
  • LintonLinton Forumite
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    SMT is very high risk - between June 2008 amd November 2008 it dropped by more than 60%. So it would be sensible to think carefully about your % holdings.
  • edited 15 July 2019 at 2:39PM
    bowlhead99bowlhead99 Forumite
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    edited 15 July 2019 at 2:39PM
    Linton wrote: »
    SMT is very high risk - between June 2008 amd November 2008 it dropped by more than 60%. So it would be sensible to think carefully about your % holdings.

    On the Amazon point, they have been buyers of Amazon since $40 or so. If they sell it for $1000 a share it was a good investment, though in reality SMT's portfolio turnover is pretty low and they generally don't sell stuff that they like, even if it drops double digit percentages.

    However, if you buy their trust today when their Amazon holding is worth over $2000 a share and they later give up and sell it at $1000 a share you might think it a bad investment. Especially if you pay a premium to fair value to buy SMT today and then later sell some of your holdings at a discount to fair value, and the fair value losses made in the meantime were geared up with borrowing.
  • stphnsteveystphnstevey Forumite
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    In terms of FAANGs, they seem to lack Apple, but have holdings to varying degrees in Facebook, Amazon, Netflix and Google

    They also hold the major China Tech Tencent, Alibaba and Baidu

    They hold some semiconductor Nvidia (although share price appears to be suffering from the downturn in Bitcoin mining)

    It appears to have around 80 holdings, but only 39 listed, the remaining are they private equity?


    Polar Capital Trust (similar Tech Trust) holds the FAANGs, this time including Apple

    They also hold the major China Tech Tencent and Alibaba, but no Baidu

    They hold some semiconductor Nvidia and also AMD
  • MarkCarnageMarkCarnage Forumite
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    Reading this thread again last night, there appear to be quite a few misapprehensions....
    The preoccupation with Tesla seems to continue. It is 3.7% of net assets of this Trust. Not a game changer. If you want to debate Tesla, a separate thread might be better. Yes, Baillie Gifford might be wrong about Tesla, so might the many other posters.

    Secondly, the fund manager doesn't care about index performance, or day to day movements in stock prices. You might, and if it bothers you a lot that SMT performance might and will vary a lot from the overall market, don't invest.

    Thirdly, it's about 20% invested in unlisted holdings, and yes the proportion has increased quite a bit in the last two years, but it's been well flagged. Rationale is to invest in certain areas before the stocks go public and when equity capital raising may be done on more favourable terms to investors.

    No, it's not low risk. Is it very high risk? Depends how you define it. I don't happen to believe that shortish term price volatility is that good a means of measuring risk for long term investors. Permanent partial or total loss of capital is high risk in my book. Yes, there is a risk of partial loss of capital in SMT. Indeed, the managers will freely admit that a not insignificant proportion of their holdings may end up with little or no value. However, a number are likely to, and have, increased factorially in value. Let's assume the fund had 20 holdings, conceptually, the manager might realistically expect one of these to be the next Google or Amazon, two or three to do pretty well, another couple to perform in line with the market, five to underperform, and ten to go bust or close to that for an equity investor. I simplify, but that's not a million miles away from what has happened.

    Disclosure - I have held SMT for well over 10 years, it has seriously impacted my wealth, in the right way! I'm now at the stage where I may think about pruning it back a bit, not because I'm suddenly worried about, more because it is now a very significant part of my portfolio, and some rebalancing may be in order. Yes it fell nearly 60% in 2008-9, but the S&P500 Index fell 45% too in $ terms, so if you can't stomach SMT in that scenario, it sounds like equities in general might be a bit rich.

    Sounds like there are some people on here who neither understand how the fund is managed, nor should invest in it because of that, as they will end up selling. No, I don't work for Baillie Gifford and never have, but I do know the house quite well.
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