Scottish Mortgage investment trust has had a good run by any standard. Worth more than £15 billion it is in the top thirty in the FTSE 100.
In the last six months the price has surged by more than 60% and over the past five years it has almost trebled. Many long term shareholders, like me, must have considered taking some profit in this comet streaking across the financial firmament. Indeed a friend who is a financial journalist has been warning me for more than five years about the sustainability of a fund so heavily exposed to Tesla, Amazon, Alibaba, Netflix, etc.
If I may digress, I have past experience of listening to advice from financially savvy friends. I was all set to sell my shares in Marconi at £10 – booking a substantial tax free profit – when I was told I should be buying more with a target of £15. I didn’t buy but nor did I sell and my holding became valueless. It was a Marks & Spencer story; when the price got down to £1 I persuaded a friend in the office to buy and he lost everything too. OK, M&S may recover, Marconi didn’t and it must have broken the prudent Lord Weinstock’s heart.
A few years ago a reader living in Ireland, whom I didn’t know, suggested meeting for lunch when he was in London. Slightly annoyingly he turned up quite late because he couldn’t resist looking at and sitting in a Tesla car being promoted on Sloane Square. A neighbour has a Tesla but I’ve not sat in it. These electric cars are expensive and, I have been informed, have tacky interiors. The door is more than ajar for a new entrant into the market that will be both electric and attractive. An innovation that would appeal to me is a small ‘fridge in the boot for Bertie’s frozen meals but with just enough room for a bottle or two of wine.
Anyway, the share price of Tesla has been turbo-charged (up 452% this year) and more than 13% of Scottish Mortgage assets were in that brand of electric soup. Time to take a profit? There would be a hefty tax bill but fortunately “nanny knows best”. Scottish Mortgage has Baillie Gifford as its nanny and BG has made the fund sell down its holding in Tesla to less than 5%.
What would you pay the two fund managers at Scottish Mortgage who most unfashionably invested in Tesla and their Baillie Gifford nanny? No price could be too high but their annual charge is only 0.36%.