The UK’s largest investment trust, Scottish Mortgage, has seen returns surge ahead of the benchmark in its first set of results since entering the FTSE 100.
According to its results for the year ending 31 March, the Baillie Gifford-owned trust has scooped up a share price return of nearly 41 per cent, outperforming the FTSE All-World index, which returned 33 per cent over the same period.
The £5.3bn trust, which was admitted to the FTSE 100 index in March, also delivered a net asset value total return of just over 38 per cent over the period.
While John Scott, chairman of the trust, said the 12-month figures were “pleasing”, he urged shareholders to focus on the five and 10-year performance record because of the trust’s long-term approach.
He said performance over a 12-month period will be affected by the “fluctuating obsessions” of broader markets or geopolitics.
Mr Scott used the past year as an example, pointing to the positive impact of the weak sterling on the trust’s short-term performance.
Over the past 10 years, however, the trust has doubled the returns seen in the FTSE All-World Index, delivering a share price total return of 302 per cent.
Commenting on the market outlook, Mr Scott said: “The world can and does change and sometimes this happens at a faster rate and is more significant than at others.”
He pointed to President Trump’s unpredictable approach to policy and the escalating troubles in the Middle East, but said the flexibility of the trust’s investment strategy makes it resilient to these macro events.
Mr Scott added: “The pace of development and technological change not only represents a huge opportunity to some businesses, but is equally a significant threat to the existence of some of the index incumbents who have failed to invest to adapt to the transformations these technologies are bringing."
By not forcing the managers to hold companies which seem under the greatest threat from such changes, he said the trust can create long-term value for shareholders.
The trust’s board has recommended a 1 per cent increase in the final dividend for the year.
Scottish Mortgage saw its ongoing charges ratio nudge down slightly from the previous year, hitting 0.44 per cent.
“Ensuring that Scottish Mortgage has one of the lowest cost ratios in the sector remains an important competitive advantage for the company, affording a clear and direct benefit to our shareholders,” Mr Scott said.
In April, Baillie Gifford launched a tiered fee scale, which means the annual management charge will be 0.3 per cent on the first £4bn of assets under management, falling to 0.25 per cent for more than £4bn.
katherine.denham@ft.com
