Home > Analysis > Should you buy the Scottish Mortgage Trust now?

Scottish Mortgage Trust is well-known for riding the long bull market in leading US Nasdaq stocks. It was one of the first to invest Tesla. While that bet has been pared back somewhat (5.3% of portfolio still owns Tesla), other companies are slowly replacing it. After such a long bull market SMT can be vulnerable to a further decline.

What are the pros and cons of investing in the Scottish Mortgage Trust?

On the upside:

  • SMT is managed by an experienced team who had researched their investment thoroughly
  • Globally positioned, SMT invests in many parts of the world as long as the business systems are competitive
  • Portfolio includes many privately listed companies that average investors couldn’t buy (see below)
  • A well-diversified equity portfolio geared towards businesses with strong ‘moats’ or excellent long-term growth

But you should be aware that:

  • SMT’s share price trend is fairly violent these days; swings in share prices may be higher than expected since the trust is still mired in a bear trend; technical support is observed at 600p
  • Tech shares may decline or underperform the market
  • Privately-listed companies valuation are unknown – since they’re not “marked to market” regularly

Here are the (latest) top 16 holdings of the Scottish Mortgage Trust:

Source: Scottish Mortgage Trust (Aug 2023)

Over the past year or so, they have relinquished older bets and acquired newer (and hotter) tech stocks like Nvidia (NVDA) – the leader in the AI boom.

Perhaps a thematic grouping of SMT’s portfolio may help you to understand the the fund’s structured. Broadly, SMT’s holdings are concentrated among:

  • Technology – ASML, Nvidia, Tesla,
  • Healthcare – Moderna, Illumina
  • China – PDD, Meituan, ByteDance, Tencent
  • Consumer – Amazon, Mercadolibre, Kering, Ferrari,
  • Private – Space Technologies, Northvolt

Of course, there are other bets like Wise (WISE), or Spotify (unlisted) that are geared towards ‘fintech’ (financial technology).

In sum, Scottish Mortgage is about pivoting into the next-gen sector leaders that can bring sustained growth over many years.

Source: Scottish Mortgage Trust

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