Popular investment trust Scottish Mortgage (SMT) may have reported record full year results but investors are focused on the current weak sentiment towards the technology space as the shares dip 1.3% to £10.64.
The trust reported a NAV (net asset value) total return of 111.2% versus 39.6% for the FTSE All-World index in the 12 months to 31 March.
The stock has recently come under pressure as fears over inflationary pressures have hit the growth stocks it typically invests in.
Scottish Mortgage fund manager Tom Slater noted that the trust had sold out of Facebook and Google parent company Alphabet while reducing its stake in Amazon.
EMBRACING THE EXTRAORDINARY
His co-manager James Anderson, due to step down in April 2022, commented: ‘There is no industry more suspicious of the unconventional than fund management. We need to reinvent from first principles. We need to help create great companies that embrace the extraordinary.’
Numis commented: ‘Now is certainly one of the moments for investors to be reminded of the long-time horizon required to invest in Scottish Mortgage.’
The broker noted that the recent 20% decline from its February highs is the third largest in the last 15 years.
‘It is impossible to time the bottom, but we note that the average period for a peak to trough share price move for Scottish Mortgage (for the 20 largest share price declines in the last 15 years) has been around two months (median 1.1 months).
‘In addition, we highlight that large drawdowns have typically been followed by strong performance.
‘We calculate an average share price return of c.40% in the 12 months following the trough of the 20 largest drawdowns in the last 15 years,’ it added.
Stifel analyst Ian Scoulter said: ‘For now, the market continues to be wary of growth stocks and this may continue to be a headwind for the trust’s portfolio in the months ahead.’
