Tesla boosts Scottish Mortgage in strongest year
James Anderson: drove the investment into Tesla
Baillie Gifford’s Scottish Mortgage Trust, best known for the retiring James Anderson’s spectacular gains on its early faith in Tesla, has posted its best ever year.
The record annual return build on long term share price total returns over five and ten years stand at 348% and 756% respectively.
SMT’s share price nearly doubled in the year to 31 March after its big holdings in US and Chinese internet giants rocketed during the coronavirus lockdowns.
Tesla, the electric car company run by Elon Musk was a huge earner after its shares soared 479%. It alone generated 36.7%, or nearly a third, of Scottish Mortgage’s 111.2% growth in net asset value (NAV) to 1,195.1p from 567.3p a year earlier.
SMT had to sell 80% of its holding in Tesla during the year to avoid it becoming too dominant in its portfolio, though it still accounts for a 4.5% share.
Portfolio turnover increased over the year in both monetary and number terms as SMT became owner of several new companies which the managers believe can drive returns over the coming years.
In its statement, the £15.4bn fund said the year “was clearly overshadowed by the COVID-19 pandemic” and “the devastating human cost” this inflicted but it was also a period that supercharged the prospect of several companies in its portfolio.
“We could point to Illumina and Moderna who, between them, took only four days to sequence the virus and make a candidate vaccine; online platforms such as Amazon that provided goods to our doors; or Zoom, the video conferencing service that turned into a verb overnight.”
Justin Dowley, the senior independent director on the board, added: “It is incumbent on us to be optimistic and look beyond the current crisis. If the last year has taught us anything, it is that the world is uncertain but that we can endure and businesses can flourish in the most challenging of circumstances.”
Lawrence Burns joined as deputy manager in March, with three Managers now working together for the year ahead.
Jointly, the managers are focused on what will dominate over the coming decade, and particular areas of focus are the intersection of IT and healthcare as well as the consequences of the switch in energy generation.
The proposed dividend is increased by 5.2% to 3.42 pence.