Scottish Mortgage defends investment in private firms

SCOTTISH Mortgage Investment Trust defended its backing of private companies after a challenging six months.

Fund manager Tom Slater said the performance of its major private businesses ‘has been strong despite the difficult prevailing conditions’.

He added: ‘Not all large companies capable of outsized growth are listed on public stock markets. Accessing such opportunities at a reasonable cost is a distinctive part of our role for shareholders.

‘Market scepticism around the performance and valuation of our private assets is misplaced, and we believe they will be a significant source of value creation for the trust in the coming years.’

The comments came as Scottish Mortgage – which is one of the country’s most popular investment trusts – reported a 2.7pc decline in net assets in the six months to the end of September.

That compared with a 4.3pc rise in the FTSE All-World index.

However, the firm pointed out that over five years its assets are up 59.6pc compared with a 49.6pc rise in the index and over ten years it is up 358.1pc against 189.5pc.

‘We will have periods when we underperform the market, and the six months in question was one,’ admitted Slater.

Scottish Mortgage has big positions in a number of private companies.

These include Elon Musk’s rocket firm Space X and Tik Tok owner ByteDance.

Among its listed investments, it was boosted by strong gains at chipmaker Nvidia, electric car company Tesla and tech giant Amazon, though these were offset by losses at drug firm Moderna, German online fashion retailer Zalando and Dutch payments group Adyen.

Scottish Mortgage shares fell 1.7pc. It has more than halved in value since peaking in 2021.