Two years ago I started buying Monks Investment Trust and told you why at the time: A Pug Called Sherbet. It has gone up by around 70%. On the same day two years ago I added to my holding in Scottish Mortgage. Both investment trusts, as it happens, are managed by Baillie Gifford.
I first bought Scottish Mortgage in 1995 and it seemed to have done quite well. If I had any other reason for buying more I have forgotten. There was a story to tell about Monks: new fund manager (Charlie Plowden), double digit discount, an old fund in the doldrums. Well, Scottish Mortgage hasn’t done too badly either – up about 60% in the same two year period and there’s a story worth telling.
The managers of Scottish Mortgage are not New Boys at Baillie Gifford. James Anderson joined in 1983 and Tom Slater in 2000. The investment trust itself was launched in 1909. Some of these old trusts rest on their laurels investing in a slew of companies that reflect their benchmark index. Anderson and Slater have done no such thing. They have gone west and they have gone east – to Silicon Valley and China. Baillie Gifford is the 4th largest shareholder in Tesla and their other investments are not for the faint-hearted either.
Here’s some of what Scottish Mortgage has in its locker: Amazon (10.04%), Alibaba (7.45%), Illumina (6.93%, Tencent (6.78%), Tesla (4.98%), Baidu (4%), Kering (3.85%), Inditex (3.36%), Netflix (3.23%), Ferrari (2.95%).
As if that isn’t exciting enough the fund has borrowed enough to achieve gearing of 9%, so if things go badly they will go very badly. Other people must like it as it trades at a premium of about 3% to its NAV.