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Scottish Mortgage has confidence in long-term despite underperformance

17th May 2023 09:39

(Alliance News) - Scottish Mortgage Investment Trust PLC on Wednesday reported a large negative total return in the latest financial year, substantially underperforming its benchmark, but it said it has "plenty of reasons for optimism" and asked shareholders to trust its "patient, long-term approach".

The Edinburgh-based company invests in growth companies, including US tech stocks such as Inc, Tesla Inc and Netflix Inc, many of which have been under selling pressure of late. Tesla is down 34% over the past 12 months.

The trust is managed by Baillie Gifford & Co.

Net asset value was 843.9 pence per share at March 31, down 20% from 1,021.9p per share on the same date in 2022.

Shares in Scottish Mortgage were 0.1% lower at 620.20p on Wednesday in London. They are down 21% over the past year.

Scottish Mortgage reported an NAV total return of negative 18% over the financial year ended March 31, after a return of negative 13% the previous year. The trust's benchmark, the FTSE All-World Index, had a total return of negative 0.9% in the same period.

Scottish Mortgage declared a final dividend for the year of 2.50p per share, up from 2.07p per share the previous year. Total dividend for the year was 4.10p per share, up 14% from 3.59p per share.

Scottish Mortgage said it recently has experienced "significant operational progress" despite stock market declines, but said this is not currently reflected in its investment results. However it intends to "focus on the bigger picture" and continue investing to generate "exceptional" results in the long term.

"We remain confident that Scottish Mortgage merits a place in all portfolios and that shareholders benefit from the patient, long-term approach taken by your managers...The company will continue to pursue its unconstrained approach to investing in the broadest opportunity set, spanning both public and private companies across the globe," Chair Fiona McBain commented.

"Whilst there is no doubt that the year ahead will present challenges, we have plenty of reasons for optimism as we continue to invest in companies that are building a better future."

Scottish Mortgage announced in March that McBain will retire at its annual general meeting on June 27. Justin Dowley will succeed her as chair.

By Emma Curzon, Alliance News reporter

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