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Scottish Mortgage Trust – It’s Scottish, but had little to do with mortgages


Launched in 1909, Scottish Mortgage is considered to be Baillie Gifford’s flagship investment trust. It is, and always has been, a truly global proposition, investing in companies across both Western economies and emerging markets.

The trust currently has £5 billion* in net assets under management. In a nutshell Scottish Mortgage is an actively managed, low cost investment trust, investing in a high conviction global portfolio with the aim of maximising total returns over the long term.

The global approach is reflected throughout the trust’s investments, with holdings in Europe and North America, complemented by exposure to emerging markets such as China and India.

The benchmark against which performance is measured is the FTSE All-World Index.

However, the trust is not tied to it, nor does the index determine the composition of the portfolio.

Rather than tracking the benchmark, the trust takes a longer-term view, seeking to produce a return above that of the index over five-year rolling periods. Scottish Mortgage is a listed UK company suitable for those investors prepared to accept a higher level of risk.

The managers take a high conviction approach to investing, willing to back global companies they view as offering particular promise. The trust aims to invest in companies that have a sustainable competitive advantage in their sector and have the potential to produce above average earnings and cash flows.

The trust is relatively focused, usually investing in 70 to 80 stocks from around the world that are identified and selected on this ‘bottom-up’ basis. Typically more than 80% of its assets are allocated to the largest 30 holdings. There are guidelines in place aimed at ensuring that there
is a sufficient level of diversification maintained.

Scottish Mortgage invests in both public companies and established private businesses. The major part of the portfolio will be held in quoted equities with good liquidity; whilst the maximum amount which may be invested in companies not listed on a public market is 25% of the portfolio, at time of purchase.

The Scottish Mortgage Trust is listed on the London Stock Exchange and denominated in Sterling.

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