Scottish Mortgage Investment Trust, the FTSE-100 company, outperformed its benchmark in a strong half year that saw it pivot towards businesses in artificial intelligence, digital commerce and electrification.
Tom Slater, who manages the trust for Baillie Gifford, said: “This period’s strongest returns came from companies building real capabilities across a wide range of sectors and geographies.
“It has become increasingly clear that the forces reshaping the global economy, from artificial intelligence to digital commerce and electrification, are not confined to any one country or industry. Our top contributors reflected this global diversity.”
The Edinburgh-based trust posted a 22.9% surge in net asset value per share for the six months to 30 September, ahead of the FTSE All-World Index’s 15.4% gain. The share price increased by 20.9%.
The share price discount to NAV widened slightly from 9% to 10.5%. During the period, the company repurchased 75.2m shares, at a total cost of £765.4m.
Returns were broad-based across the portfolio and geographies from Asia to the Americas and Europe.
Stating the importance of long-term patience through periods of volatility, the trust said that over five years NAV had risen 30.3% and the over years by 472.4%.
Revenue earnings for the period were higher than the comparable period, primarily due to the previous six months’ earnings being depressed by the write-off of Northvolt’s accrued bond income.
Although income from the portfolio was slightly lower, the board is proposing an unchanged interim dividend of 1.6 pence per share.
Holdings in ASML and TSMC, essential suppliers to the world’s most advanced chipmakers, delivered strong returns as investment in computing power remained a top priority for both enterprises and governments.
The expansion of digital platforms, both consumer- and enterprise-facing, also contributed significantly to the trust’s returns. Companies such as Roblox, Meta, and Spotify appreciated as user engagement and monetisation improved.
In commerce and logistics, holdings in MercadoLibre and Sea performed well. The trust also saw renewed investor attention in companies tied to electrification and clean energy. CATL, the dominant Chinese battery manufacturer. It also added to our position in BYD, a Chinese company that makes electric cars and buses. Both companies are positioned to benefit as transport systems shift away from fossil fuels.
“Underlying all these businesses is a shared set of characteristics: the ability to scale efficiently, to benefit from compounding network or data effects, and to operate with a long-term view in sectors undergoing structural change,” said Mr Slater.
“Whether in Taiwan, Brazil, Sweden, Singapore or Silicon Valley, these companies are pushing the boundaries of what’s possible and the market has begun to take notice.
In recent months, the trust has introduced a number of new holdings that reflect how the global economy is changing. While the sectors vary, the companies share important traits: they are founder-led, ambitious, and well placed to benefit from long-term shifts in technology, consumer behaviour and energy.
Mr Slater noted that inflation and interest rate pressures have eased, along with US-China tensions.
“However, we believe the most important shifts are not occurring in policy corridors, but in labs, datacentres, and factories around the world,” he said.
“This is a period of deep technological transformation. AI is reshaping how businesses operate and how decisions are made. The infrastructure powering that change is in high demand. But progress is not limited to computing.
“We’re seeing progress in areas as diverse as personalised healthcare, electrification, logistics, and digital content. The companies driving these shifts operate across continents, cultures, and sectors but they share the same ambition to reimagine what’s possible.
“Periods of strong performance are welcome, but they do not change our approach. We are not chasing short-term trends or market approval. We are long-term owners, focused on identifying the exceptional few companies that can deliver transformational outcomes over decades.
“Many of the companies that contributed most this period did so after long stretches of being out of favour. Their short-term returns were not linear nor were they predictable. But they reflect what we believe is the essence of successful investing: patience in the face of noise, and conviction in the face of doubt.
“We thank shareholders who share that mindset. Our task is to seek out the rare businesses creating the future, and to support them with long-term and constructive ownership, wherever in the world they may be.”
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