July 4 is going to be a busy day. Not only is it when the US celebrates its independence but this year it will also be when the UK holds a general election. For investors in Scottish Mortgage Investment Trust, however, July 4 is all about the AGM.
The trust is one of the most popular trusts held by investors each month and has also been part of the Moneyweek investment trust portfolio since it launched in 2012.
While the trust saw record returns, its shares plunged 45% at the beginning of 2022 putting it under pressure as it continues to play catch up.
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After a year in which the UK’s biggest investment trust reported a NAV total return of 11.5% in the 12 months to the end of March, but yet failed to beat its benchmark, investors will be especially keen to hear from Scottish Mortgage’s two co-managers as to what is in store for the next 12 months.
Broker interactive investor says: “Tom Slater and Lawrence Burns will have plenty to discuss following a stunning year for the trust’s largest holdings, the semiconductor firms Nvidia and ASML, as well as a much more challenging one for Tesla.
“The meeting, which was arranged before Rishi Sunak called a general election for the same day, is one of the most important in the AGM calendar and provides a rare opportunity to hear directly from and question two of the UK’s most senior investment managers.”
Scottish Mortgage: positive performance
The investor in growth companies globally is managed by Baillie Gifford and has stakes in well-known technology stocks aside from Nvidia and ASML that include Amazon, Facebook owner Meta and TikTok-owner ByteDance.
Although Scottish Mortgage failed to beat its benchmark in the year to the end of March, the performance was a marked improvement on the negative returns notched up both in terms of net asset value (NAV) and share price in the previous two years.
Indeed, it has been a roller coaster ride for shareholders of Scottish Mortgage, the £11bn giant of the investment-trust sector. The share price trebled to £15 in the two years to late 2021, then fell by 60% to a low of £6 in the next 18 months. It then climbed back to more than £8 at the end of 2023, before slipping to 750p in January.
Growth stocks and volatile markets
“It has been a challenging yet rewarding year for the company set against a backdrop of volatile markets,” said the chair of the trust, Justin Dowley, when the latest annual results were published. “Conflicting forces have been pulling investors in different directions.
“There is a sense of optimism regarding the integration of artificial intelligence into business models. Meanwhile, the macroeconomic and geopolitical factors driving market anxiety are too numerous to mention.”
Looking ahead, Scottish Mortgage is “in a strong position to maximise returns for shareholders over the coming years”, Dowley added, citing its “strong balance sheet, and high conviction in the current portfolio”.
Investors will be keen to hear more at the AGM in Edinburgh next month.