PLEADS FOR PATIENCE
One of the UK’s largest investment trusts, Scottish Mortgage (SMT), has sounded a downbeat tone about market conditions and questioning the future upside from the tech giants which have fired its performance so far in 2017.
The £6.4bn Baillie Gifford fund, run by James Anderson and Tom Slater, has substantial holdings in the likes of Amazon, Facebook, Google-owner Alphabet and Chinese internet giants Alibaba, Baidu and Tencent.
In comments accompanying first half results (3 Nov), the investment trust says Anderson and Slater ‘have been considering the future prospects for all six of these companies, asking if they still have the potential to become a multiple of their current size’.
There was also a commitment to stick to a longterm investment approach even if its investments were to fall out of favour and a suggestion that any market volatility may well be used as a buying opportunity for existing stocks in the portfolio. The emphasis of the fund is on capital growth but the dividend has nonetheless been increased for the last 34 years. It was acknowledged that continuing this track record for the March 2018 financial year would likely require the company to dip into its revenue reserves. (TS) DISCLAIMER: Editor Daniel Coatsworth has a personal investment in Scottish Mortgage
Amazon top holding at 7.7% of the fund