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Scottish Mortgage Trust differences/similarities to Nasdaq100 Tracker (EQQQ)
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stphnstevey
Posts: 3,227 Forumite


What would be the similarities and differences?
Are there any benefits or downsides?
The returns seem similar, almost like SMT was tracking the NASDAQ100 here
OCF is similar, SMT 0.37% and EQQQ 0.3%
SMT has access to pre-IPO companies
Are there any benefits or downsides?
The returns seem similar, almost like SMT was tracking the NASDAQ100 here
OCF is similar, SMT 0.37% and EQQQ 0.3%
SMT has access to pre-IPO companies
0
Comments
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SMT is leading EQQQ over time periods of more than a couple of years, has lagged the past year.0
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SMT vs. a NASDAQ100 tracker?
The key difference of course is Active vs. Passive - only you can make that call - for some this is a case of religion rather than analysis. [I'm a fence sitter myself: my portfolio is about 50:50]
As you say: both have relatively low charges (especially for SMT, an active fund).
Neither would be considered core investments. (I have 2%)
Both have similar high volatility c. 15% (so both are high risk but high return).
Both have similar, high, sharpe ratios, c 1.4, so comparable, good, risk/return.
For SMT: It has a morningstar gold rating. Trustnet is an AFI pick for an aggressive investor. However, you must know:
Role: Supporting. Whilst the fund nominally provides exposure to global equities, investors should
be cognisant that the highly active nature of the management, the inclusion of unlisted investments, structural gearing, and a relatively concentrated portfolio are likely to lead to a bumpy ride at times. Investors should consider this a long-term investment and part of a wider diversified portfolio.
The nature of this high-growth portfolio with its bias to information technology, healthcare, and largely Internet-related consumer cyclicals is likely to see volatility. But we are reassured by the experience of Anderson and Slater with this mode of investment and the wider approach at BG. This isn’t a fund for
the risk-averse but does have considerable merit for long-term investors seeking exposure to the potential winners of tomorrow within a broadly spread portfolio. The fund retains its Morningstar Analyst Rating of Gold.
SMT is a global fund, with a tech bias. NASDAQ is a US index, with a heavy tech bias.
The numvers:
United States 43.7
China 19.0
Germany 4.1
France 3.7
Netherlands 2.9
Spain 2.2
Sweden 1.9
United Kingdom 1.3
India 1.1
Canada 0.5
And a little wider in sector:
Consumer Cyclical 38.7
Technology 25.8
Healthcare 12.3
Financial Services 2.7
Industrials 0.9
SMT is invested in things that could never be in a NASDAQ tracker.
"The company has long had an element of unlisted equity investment; at the end of April 2018, it stood at 14% (from 13% in 2017) with a maximum limit (not target) set at 25%." So, although SMT is a Global Large-Cap Growth Equity fund, its is likely have a wider Market-CAP spread than NASDAQ100, which can only ever invest in the largest 100 US tech funds.
EQQQ is fairly similar: (to be fair tracker funds get less analysis than active ones).
Invesco EQQQ Nasdaq-100 ETF provides exposure to the largest nonfinancial companies listed on the Nasdaq Stock Market. The Nasdaq 100 is a well-known global large-cap growth index, but it is heavily skewed toward technology sector and entails high stock concentration risk. Tracking this index only makes sense as a tactical tool to gain exposure to the US technology firms and is not ideal for investors seeking a broad-based US large-cap equity holding. Hence, we maintain the fund’s Morningstar Analyst Rating at Neutral.
NASDAQ100 is a US index so your holdings are 98% US. And 100% in dollars (unless you get the GBP hedged version... in which case the comparison is probably meaningless)..
Technology 55.78 [More tech focused than SMT: you should maybe compare Polar Capital Technology instead?]
Consumer Cyclical 19
Financial Services 1.98
Consumer Defensive 6.49
Healthcare 7.62
Utilities 0.38
Communication Services 4.42
Industrials 4.20
NASDAQ 100, is by definition 100 companies, good or bad.
SMT has 79 (0418).
In performance: SMT suffered a bit more in 2018. So 1 year return is lower.
But over any longer period: SMT generally outperforms: E.G.
3 year annualized: 28.54% vs. 24.77%. [But the delta is fairly small]
But both outperform an index like US Large Cap Growth.
My conclusion: from a long distance, they look comparable, but close up are very different inside. I express no opinions on the differences: that's up to you.
Therefore, you probably shouldn't be considering them side by side. Maybe step back and ask what role in your portfolio would it be filling? [As a low conviction investor, with far too many funds in my portfolio, I might end with both!]
Certainly, morningstar look at them completely differently: EQQQ is strictly an investment in the sector. SMT is an investment in the fund managers.0
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