The manager of the £16.1 billion Scottish Mortgage Investment Trust has declared that the acceleration of artificial intelligence into a “global infrastructure buildout” is the most important structural change in the world economy since the internet’s emergence.
And he says the world is “still in the early stages” of this AI acceleration.
Tom Slater also highlighted Elon Musk’s SpaceX as the single largest contributor to the returns generated by the investment trust in the 12 months to March 31.
He highlighted the fact that SpaceX, flagged by Scottish Mortgage as being among several holdings which are “realistic candidates” for stock market flotations, accounted for more than 19% of the investment trust’s total assets at March 31.
Scottish Mortgage, which is managed by Edinburgh-based Baillie Gifford, today reported a significant outperformance of global stock markets over one and 10 years.
Lawrence Burns, deputy manager of Scottish Mortgage, meanwhile highlighted the growth rate of Anthropic, which has developed next-generation AI assistant Claude.
He said: “In January 2025, the artificial intelligence company Anthropic had an annualised revenue run rate of $1 billion. Fifteen months later, it had surpassed $30 billion. No company in recorded history has grown organic revenue at this scale and pace.”
Mr Burns added: “As one of Scottish Mortgage’s private holdings, Anthropic has helped usher in a third era of generative artificial intelligence. The implications of the rise of agents reach across our portfolio into the structure of the software industry, the value of consumer businesses, the rise of a parallel Chinese AI ecosystem, and the physical supply chain that must be built to meet insatiable computational demands.”
Mr Slater said: “It is difficult to recall a 12-month period in which more of the assumptions underpinning the post-war international order were deliberately dismantled. But we think the development that will matter most when this period is viewed in retrospect is not the fracturing of the old order. It is the construction of the new one.
“Beneath the geopolitical turbulence, a transformation of a fundamentally different kind is underway. The acceleration of artificial intelligence into a global infrastructure buildout is, in our judgment, the most important structural change in the global economy since the emergence of the internet, and we are still in its early stages. The dismantling of old arrangements and the construction of new capability defined the portfolio’s year.”
Scottish Mortgage today reported a total return on net asset value of 27.4% for the year to March 31. It observed this was ahead of a total return of 18% on the FTSE All-World Index.
The trust declared that, over the last decade, the managers have “delivered outperformance for shareholders”, with a total return on net asset value of 435% comparing with one of 234% on the FTSE All-World Index.
Scottish Mortgage noted it “aims to invest in the world’s most exceptional growth companies, whether public or private, anywhere in the world and patiently own them over long periods of time”.
Mr Slater said: “SpaceX should no longer be thought of as an aerospace contractor but as a dual monopoly: the world’s dominant launch provider and a global connectivity utility with the potential for software-like margins. Though the launch vehicles generate the media attention, the valuation has been driven primarily by its satellite communications subsidiary, Starlink, which is building the kind of predictable, highly profitable revenue that the best software businesses aspire to. The difference is that its assets are in orbit and extraordinarily difficult to replicate. The acquisition of xAI brings a further dimension that the market is only beginning to price.”
Scottish Mortgage highlighted the scale of its investment in companies which are not listed on the stock market.
It observed it has been investing in such private companies since 2012, declaring it has deployed £4.9 billion of capital in this area to “give shareholders low-cost access to the most exciting, transformational growth businesses that are staying private for longer”.
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Scottish Mortgage added: “The company holds several of the world’s most valuable private companies, and a number of them, including SpaceX, Anthropic, Databricks, ByteDance and Stripe, are now realistic candidates for public listings in the coming years.”
It noted that, in the year to March 31, it deployed £254m of new capital in private companies, compared with £132m in the prior 12 months.
Scottish Mortgage observed that new buys include Anthropic, Loyal Animal Health, and RedNote, while follow-on funding was provided to several holdings including Enveda, Redwood Materials and Zipline.
Christopher Samuel, who chairs Scottish Mortgage, said: “I am pleased to report a strong year for Scottish Mortgage. Our strategy is built on the belief that a relatively small number of exceptional companies can drive a disproportionate share of long-term returns. Identifying and holding these outliers requires patience and a willingness to tolerate volatility, which is an inherent feature of investing in companies at the forefront of change.”
Scottish Mortgage said: “Few vehicles provide shareholders with exposure to both listed and private growth companies in a single, liquid portfolio. Private market exposure is often associated with high fees and limited access. However, Scottish Mortgage provides access to many exceptional private companies through the investment trust structure, many of which are now large, established businesses rather than early-stage ventures.”
The investment trust noted that, “amid volatile markets”, the discount of its share price to net asset value widened during the year to March 31 from 9% to 9.5%, “roughly in line with the investment trust sector average of 11.2%”.
However, it added: “Encouragingly, post year-end, renewed investor interest has resulted in the company trading at a modest premium.”
It noted that shareholders had approved a “targeted change” to the company’s investment policy at a general meeting on April 10.
Scottish Mortgage noted this provides the managers with “limited additional flexibility” to invest in private companies when the portfolio is above the 30% of total assets limit for such holdings, through an additional capacity of up to £250m, subject to annual shareholder approval.