Investing in Scottish Mortgage: A Smart Move?

As an investor, I’m always on the lookout for opportunities that can provide long-term growth and stability. Recently, I’ve been taking a closer look at Scottish Mortgage Investment Trust (LSE: SMT), and I must say, the results are impressive.

A Brief History of Scottish Mortgage

Scottish Mortgage has been through its fair share of ups and downs over the past few years. The share price doubled between early 2020 and 2021, only to fall heavily when Covid struck. Then, it surged 50% to reach an all-time high of 1,528p in November 2021. This was followed by a 60% slump over 18 months as higher interest rates sparked a sell-off in growth stocks. Since then, it has jumped 44% to reach 900p.

Scottish Mortgage share price over the past few years

What If I’d Invested £5,000 in Scottish Mortgage?

Let’s say I’d invested £5,000 in Scottish Mortgage at the start of 2024. With the current share price at 900p, my investment would now be worth £5,570 on paper. That’s an 11.4% gain, which is just over double that of the Footsie (5.4%).

“A few months is a mere blink of the eye for Scottish Mortgage. It invests in firms it believes can grow rapidly for a decade or more, and asks to be judged over this sort of timescale.” - Source

Long-term Performance

But how has Scottish Mortgage performed over the last 10 years? The answer is very impressively. Up to 31 March, the net asset value per share increased by 382% on a total return basis versus 218% for the FTSE All-World Index (its benchmark). That would have turned £5,000 into £24,100 in a decade.

Scottish Mortgage’s long-term performance

Portfolio Progress

Scottish Mortgage has been boosted by the very strong performance of its key holdings over the past year. Chipmaker Nvidia has rocketed 209%, while shares of ASML, Netflix, and Spotify have risen 42%, 55%, and 95%, respectively.

Private holding SpaceX recently sent Starship, the world’s largest rocket, into orbit. It even pirouetted and landed itself upon return. A fully reusable Starship would be a revolutionary advance in spaceflight, solidifying SpaceX’s dominance in the field of low-cost satellite launches.

SpaceX’s Starship rocket

Risks and Opportunities

One risk here is the heavy concentration in the portfolio, with about one-third invested in firms linked to artificial intelligence (AI). If the AI revolution is a bubble, as some fear, its bursting could hit the trust hard.

However, I’m excited about the massive growth potential of Scottish Mortgage’s holdings. And I’d feel comfortable adding the stock to my portfolio at 900p if I didn’t already own it.

Scottish Mortgage’s logo

Conclusion

In conclusion, Scottish Mortgage Investment Trust has shown impressive growth potential over the long term. With its strong portfolio and exciting holdings, I believe it’s a smart move to consider investing in Scottish Mortgage.

Investing in Scottish Mortgage