Analysts have heaped praise on Baillie Gifford-managed Scottish Mortgage (SMT) after the investment trust topped the 10-year industry performance table.
According to numbers crunched by Morningstar, Scottish Mortgage’s NAV (net asset value) total return of 757% ranks first out of a peer group of 2,408 investment vehicles over the last 10 years. The peer group average comes in at a limp-looking 134% by comparison, while the MSCI ACWI total return of 172% sounded a clarion call for the active fund industry versus trackers.
Scottish Mortgage, and its star stockpicker James Anderson, have left ‘an indelible legacy’ on the investment trusts industry, said analysts at Investec. Anderson is set to retire from Baillie Gifford on 30 April 2022 and step down as Scottish Mortgage’s joint portfolio manager on that date.
Though Anderson’s retirement marks the end of an era, Investec believes scepticism that Scottish Mortgage can continue to set the performance standard in future will ‘prove misplaced’.
TEAM PLAYERS NOT STAR MANAGERS
Baillie Gifford managers and analysts work closely as a team and pursue long-term investments capable of what it has called ‘super-normal returns’. The staggering returns performance has been built on the back of big bets on visionary businesses, such as Tesla, Amazon, and Chinese tech titans Alibaba and Tencent.
Tom Slater, co-manager of Scottish Mortgage since 2015, will become lead portfolio manager once Anderson has stood down, with Lawrence Burns becoming deputy portfolio manager with immediate effect.
‘Slater has proven a highly capable investment manager and made a significant contribution to Scottish Mortgage, something that James Anderson has consistently been the first to point out,’ insists Investec.
Scottish Mortgage has ‘deservedly established itself as the flagship’ of the UK closed-end industry by sticking to a clear, well-articulated philosophy, said Investec. The trust has also ‘fully utilised the competitive advantages of the closed-end structure, including the ability to invest in illiquid investments and employ strategic gearing, while costs have been driven down to extraordinarily low levels,’ Investec said.
LASTING LEGACY
Anderson has made an absolute fortune for shareholders but his contribution extends far beyond Scottish Mortgage. He has ‘thrown down a gauntlet to peers and, in our view, the industry is now stronger as a result.’
‘In addition, we strongly believe that the inimitable achievements have helped to raise the profile of the entire closed-end industry and contributed to the influx of a new generation of investors over the past decade, who now recognise that the structural advantages of closed-end funds should underpin superior long-term returns.’
