Cover story
more liquidity but less alpha
opportunities,” he says.
“From here you need to consider
how this asset growth affects the
liquidity in the fund. Is the unit-
holder register concentrated? What
would happen to the liquidity profile
if the large holders sell? Has the
manager been forced to hold more
securities? They could also have been
handed more mandates outside of the
fund you are backing as a ‘reward’ for
success – which potentially dilutes
the attention they pay it.”
Andrew Hardy, co-head of research
at Momentum Global Investment
Management, says hubris also plays a
part, and the warning signs are often
evident well before performance
figures deteriorate.
6 / 7
SCOTTISH
SCOTTISH
MORTGAGE
MORTGAGE
INVESTMENT
INVESTMENT
TRUST
TRUST
“Close monitoring
is required to spot
these incremental and
subtle shifts, as well as
acknowledging the margins
between great and average
investors are built across
many small factors”
He says the excessive growth in
assets and strategy proliferation cited
by Green can be symptomatic of this
problem. However, he believes other
subtler signs are often more valuable.
“These include evidence of
overconfidence, a loss of process
discipline or ceding accountability for
portfolio decisions,” he says.
“Close monitoring is required to spot
these incremental and subtle shifts,
as well as acknowledging the margins
between great and average investors
are built across many small factors.
Star managers wane slowly rather
than going out with a bang.”
Style conscious
It is not all down to the individual
manager, however – even if they
continue to do everything right, their
fate is not always in their own hands.
SCOTTISH MORTGAGE
ENTERED THE
FTSE 100 INDEX IN
MARCH 2017.
WHO SAID THE SKY HAD
TO BE THE LIMIT?
Business’s ability to exhibit exponential growth lies at the heart of the Scottish Mortgage Investment Trust.
Our portfolio consists of around 80 of what we believe are the most exciting companies in the world today. Our vision
is long term and we invest with no limits on geographical or sector exposure.
We like companies that can deploy innovative technologies that threaten industry incumbents and disrupt sectors
as diverse as healthcare, energy, retail, automotive and advertising.
Over the last five years the Scottish Mortgage Investment Trust has delivered a total return of 143.1% compared
to 106.9% for the sector*. And Scottish Mortgage is low-cost with an ongoing charges figure of just 0.37%**.
Standardised past performance to 31 December*
2015 2016 2017 2018 2019
Scottish Mortgage 13.3% 16.5% 41.1% 4.6% 24.8%
AIC Global Sector^ 9.1% 23.5% 26.4% -1.8% 24.5%
^Weighted average.
Past performance is not a guide to future returns.
Please remember that changing stock market conditions and currency exchange rates
will affect the value of the investment in the fund and any income from it. Investors may
not get back the amount invested.
For a blue sky approach call 0800 917 2112 or visit us at www.scottishmortgageit.com
A Key Information Document is available by contacting us.
Long-term investment partners
*Source: Morningstar, share price, total return as at 31.12.19. **Ongoing charges as at 31.03.19 calculated in accordance with AIC recommendations. Details of other costs
can be found in the Key Information Document. Your call may be recorded for training or monitoring purposes. Issued and approved by Baillie Gifford & Co Limited, whose
registered address is at Calton Square, 1 Greenside Row, Edinburgh, EH1 3AN, United Kingdom. Baillie Gifford & Co Limited is the authorised Alternative Investment Fund
Manager and Company Secretary of the Company. Baillie Gifford & Co Limited is authorised and regulated by the Financial Conduct Authority (FCA). The investment trusts
managed by Baillie Gifford & Co Limited are listed UK companies and are not authorised and regulated by the Financial Conduct Authority.
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