Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@. Skimlinks & other affiliated links are turned on

Search
  • FIRST POST
    • Alz1986
    • By Alz1986 7th Jun 19, 5:10 PM
    • 85Posts
    • 20Thanks
    Alz1986
    Scottish Mortgage Trust - Bright Future?
    • #1
    • 7th Jun 19, 5:10 PM
    Scottish Mortgage Trust - Bright Future? 7th Jun 19 at 5:10 PM
    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.
Page 1
    • Thrugelmir
    • By Thrugelmir 7th Jun 19, 6:13 PM
    • 64,008 Posts
    • 56,602 Thanks
    Thrugelmir
    • #2
    • 7th Jun 19, 6:13 PM
    • #2
    • 7th Jun 19, 6:13 PM
    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.
    “The stock market is a device for transferring money from the impatient to the patient.” – Warren Buffett
    • Economic
    • By Economic 7th Jun 19, 6:30 PM
    • 519 Posts
    • 538 Thanks
    Economic
    • #3
    • 7th Jun 19, 6:30 PM
    • #3
    • 7th Jun 19, 6:30 PM
    As I'm considering selling off and moving money elsewhere due to its 1 year negative NAV.
    Originally posted by Alz1986
    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!
    • AnotherJoe
    • By AnotherJoe 7th Jun 19, 6:48 PM
    • 15,223 Posts
    • 18,327 Thanks
    AnotherJoe
    • #4
    • 7th Jun 19, 6:48 PM
    • #4
    • 7th Jun 19, 6:48 PM
    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.
    Please dont criticise my spelling. It's excellent. Its my typing that's bad.
    • Thrugelmir
    • By Thrugelmir 7th Jun 19, 9:11 PM
    • 64,008 Posts
    • 56,602 Thanks
    Thrugelmir
    • #5
    • 7th Jun 19, 9:11 PM
    • #5
    • 7th Jun 19, 9:11 PM
    plus its sales will likely be big this Q and bump the shares back up.
    Originally posted by AnotherJoe
    Serially under forecast todate. Hence why the shares continue to drift.
    “The stock market is a device for transferring money from the impatient to the patient.” – Warren Buffett
    • Filo25
    • By Filo25 7th Jun 19, 10:14 PM
    • 1,949 Posts
    • 2,799 Thanks
    Filo25
    • #6
    • 7th Jun 19, 10:14 PM
    • #6
    • 7th Jun 19, 10:14 PM
    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.
    • doe808
    • By doe808 7th Jun 19, 10:33 PM
    • 280 Posts
    • 267 Thanks
    doe808
    • #7
    • 7th Jun 19, 10:33 PM
    • #7
    • 7th Jun 19, 10:33 PM
    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.
    Originally posted by Alz1986

    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_dog
    • By cloud_dog 8th Jun 19, 8:37 AM
    • 4,441 Posts
    • 2,759 Thanks
    cloud_dog
    • #8
    • 8th Jun 19, 8:37 AM
    • #8
    • 8th Jun 19, 8:37 AM
    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

    Sometimes.... I am like a dog with a bone
    • Aminatidi
    • By Aminatidi 8th Jun 19, 8:46 AM
    • 101 Posts
    • 61 Thanks
    Aminatidi
    • #9
    • 8th Jun 19, 8:46 AM
    • #9
    • 8th Jun 19, 8:46 AM
    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.
    Originally posted by cloud_dog
    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.
    • tin586
    • By tin586 8th Jun 19, 10:43 AM
    • 58 Posts
    • 33 Thanks
    tin586
    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.
    Originally posted by Thrugelmir
    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!
    Originally posted by Economic
    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...
    • Audaxer
    • By Audaxer 8th Jun 19, 5:23 PM
    • 1,806 Posts
    • 1,120 Thanks
    Audaxer
    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.
    Originally posted by Alz1986
    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.
    • DrSyn
    • By DrSyn 8th Jun 19, 7:18 PM
    • 673 Posts
    • 399 Thanks
    DrSyn
    Alz1986

    Your OP gives me the impression you are new to investing. That you chose SMT because others said it is a good trust. That before investing you did not consider that:-

    Market values can go up and down by large amounts.

    The long term nature of investing (10 years or more).

    The risks involved in investing,means that you may get back less than you put in. Or just how much risk you where willing to take.

    Your SMT, is an Investment Trust, so can therefore go to a discount or premium, has a concentrated portfolio of 68 holdings and is actively managed. Comparing SMT to an index, might be thought of as comparing apples with oranges.

    I suggest you look at these before decide what to do, they may be of help and interest:-

    http://www.kroijer.com/

    https://www.ifa.com/indexfundsthemovie/
    • Alz1986
    • By Alz1986 8th Jun 19, 10:19 PM
    • 85 Posts
    • 20 Thanks
    Alz1986
    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.
    Originally posted by AnotherJoe

    Amazon and Netflix are the 2 FAANG stocks in its holdings, and I think the interesting thing is that the Nasdaq 100 (EQQQ Powershares) which hold them all and is very tech heavy had exceeded its all time high recently before coming down again - which makes me a bit dissapointed in SMT.
    • Filo25
    • By Filo25 8th Jun 19, 10:28 PM
    • 1,949 Posts
    • 2,799 Thanks
    Filo25
    Amazon and Netflix are the 2 FAANG stocks in its holdings, and I think the interesting thing is that the Nasdaq 100 (EQQQ Powershares) which hold them all and is very tech heavy had exceeded its all time high recently before coming down again - which makes me a bit dissapointed in SMT.
    Originally posted by Alz1986
    No active fund will beat its benchmark all the time, if you are going to be disappointed every time that happens, then I would agree passive investment is probably the best way forward, if it is more a case of the overall decline worrying you then you are investing way beyond your risk tolerance.

    In terms of SMT's performance I would imagine the significant holding in Tesla hasn't helped, but that is the kind of stock SMT will hold, they invest in companies they think have the potential to make massive returns, but some will fall by the wayside (and Tesla certainly could be one of those)
    • Alz1986
    • By Alz1986 8th Jun 19, 10:40 PM
    • 85 Posts
    • 20 Thanks
    Alz1986
    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.
    Originally posted by Aminatidi



    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.
    Originally posted by cloud_dog

    Though I do agree for first time investors SMT is really not a suitable fund - which is the advice I give out myself ...(I need to practice what I preach!).



    I was aware of its volatility, hence why I held onto it even though it had plunged 13%+ from my entry throughout the year. I am more concerned it doesnt appear to be making up much ground when the markets were rallying.



    Its not just indexes, even other BG IT's e.g. Monks have recovered well.


    They have also increased their unquoted/ unlisted holdings upto 25% ...



    Having said all that, I am becoming worried at their strategy, especially with all these "good relationships" which appear to have dragged the value down instead of up, but history is on the managers side so I'll hold onto it for the time being and re-assess later in the year.
    • Filo25
    • By Filo25 8th Jun 19, 11:00 PM
    • 1,949 Posts
    • 2,799 Thanks
    Filo25
    On the other hand I quite like the fact that it holds a lot of unquoted stock (which I would struggle to access otherwise), a lot of opportunities in that area, but equally it isn't something I would be comfortable with as a core holding
    • DrSyn
    • By DrSyn 9th Jun 19, 8:52 AM
    • 673 Posts
    • 399 Thanks
    DrSyn
    Having said all that, I am becoming worried at their strategy, especially with all these "good relationships" which appear to have dragged the value down instead of up, but history is on the managers side so I'll hold onto it for the time being and re-assess later in the year.
    Originally posted by Alz1986
    This sounds as if you have become attached to the share and are trying to find reasons to keep it, instead of letting it go.

    History of a manager as we have seen recently is not a good guide for keeping a share.

    Bill Miller beat his index (S&P 500) for 15 years. Things changed he did not and all 15 years gains where wiped out.

    SMT share price in the future may be better, worse or the same as now.

    No one should invest above their risk tolerance. If it is worrying you so much, sell it and move on.
    • cloud_dog
    • By cloud_dog 9th Jun 19, 3:41 PM
    • 4,441 Posts
    • 2,759 Thanks
    cloud_dog
    Amazon and Netflix are the 2 FAANG stocks in its holdings, and I think the interesting thing is that the Nasdaq 100 (EQQQ Powershares) which hold them all and is very tech heavy had exceeded its all time high recently before coming down again - which makes me a bit dissapointed in SMT.
    Originally posted by Alz1986
    I'm not defending the recent performance of SMT but I think you are showing your lack of understanding. Firstly, SMT does not track the above index (it tracks the FTSE AllWorld Index (in sterling terms)) but, that aside it has pretty much done well in comparing it against the Powershares EQQQ:



    In late 2017 / early 2018 it beat EQQQ significantly. In 2019 it has not exceeded EQQQ but it fell significantly more sharply / further in late 2018.

    I am unsure why you don't just purchase Powershares EQQQ?
    Personal Responsibility - Sad but True

    Sometimes.... I am like a dog with a bone
    • Economic
    • By Economic 9th Jun 19, 4:26 PM
    • 519 Posts
    • 538 Thanks
    Economic
    I'm not defending the recent performance of SMT but I think you are showing your lack of understanding. Firstly, SMT does not track the above index (it tracks the FTSE AllWorld Index (in sterling terms)) but, that aside it has pretty much done well in comparing it against the Powershares EQQQ:



    In late 2017 / early 2018 it beat EQQQ significantly. In 2019 it has not exceeded EQQQ but it fell significantly more sharply / further in late 2018.

    I am unsure why you don't just purchase Powershares EQQQ?
    Originally posted by cloud_dog
    The SMT does not track any index, it uses the the FTSE All-World Index as a benchmark, which is different to tracking the index.
    "The Company aims to achieve a greater return than the FTSE All-World Index (in sterling terms) over a five year rolling period or longer. This benchmark is a reference point for considering performance and emphatically is not a portfolio construction tool. The portfolio does not set out to reproduce the index and there will be periods when performance diverges significantly from the benchmark."
    • cloud_dog
    • By cloud_dog 9th Jun 19, 4:54 PM
    • 4,441 Posts
    • 2,759 Thanks
    cloud_dog
    Yes, I rushed my post a little.
    Personal Responsibility - Sad but True

    Sometimes.... I am like a dog with a bone
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

3,287Posts Today

7,808Users online

Martin's Twitter