Trustnet Magazine Issue 48 FEBRUARY 2019 | Page 14

Advertorial feature
has become today would have been
almost impossible. Amazon Web
Services and the Cloud wasn’t really
a topic that anyone would have
considered at that time. Amazon
was meant to be all about books.
Now, Bezos has assembled one of the
world’s most dominant companies
and become the richest man in the
world, but what matters to him is
what the next big achievement is. This
is an immensely powerful, deeply
demanding, but very relevant lesson.
China is also very important to
Scottish Mortgage. Over the course
of the last five years, the managers
have become preoccupied, or even
obsessed, by the scale and the pace
of development in China and how
the entire model of that economy has
been transformed. Most investors
look at China through the eyes of
the index makers – it’s an emerging
market, it should be a tiny proportion
of your portfolio. But within Scottish
Mortgage it is the home of some of
the world’s greatest companies and
the world’s greatest management
teams. China is an extremely large
part of the investment strategy and of
the investment portfolio of Scottish
Mortgage.
Scottish Mortgage believes that
it is owning big winners which
FE TRUSTNET
[ SCOTTISH MORTGAGE ]
14 / 15
SCOTTISH MORTGAGE
ANNUAL PAST
PERFORMANCE TO 31
DECEMBER EACH YEAR (%)
2014 2015 2016 2017 2018
21.4
13.3
16.5
41.1
4.6
Source: Morningstar, share price, total return.
what capitalism ought to be about
(namely building companies that
contribute to the economy and to the
society of the future), they will have
done something worthwhile already.
Following this, perhaps investment
returns will look after themselves.
One thing which is certain about
the future is the cost of running a
portfolio when compounded over
years and decades. This makes a
huge difference for the eventual
outcome of the investor. With a
current ongoing charge of 0.37 per
cent, Scottish Mortgage is absolutely
committed to keeping its costs low
so that our shareholders benefit
from the huge amounts of progress
available out there. We hope people
will invest in progress with us.
Past performance is not a guide
to future returns.
really matters. An example of this
over the years has been Tencent,
a small messaging service which,
at one point, was one of the top 10
companies in the world by market
capitalisation. In China, three
companies, Tencent, Alibaba, Baidu,
have funded a whole new generation
of exciting growth companies. These
companies are not necessarily listed
on stock markets today, but that does
not mean that they are not large, that
they are not fiercely independent,
and that they are not pursuing huge
opportunities.
There are a number of examples
of these types of companies in the
Scottish Mortgage portfolio. When
the managers consider the ultimate
purpose of the trust, they genuinely
believe in the intense obliquity of
thinking that if they seek to attain
IMPORTANT INFORMATION
Investments with exposure to overseas securities can be affected by changing
stock market conditions and currency exchange rates. The trust’s risk could
be increased by its investment in unlisted investments. These assets may be
more difficult to buy or sell, so changes in their prices may be greater.
For more details on the Scottish Mortgage Investment Trust, including the Key Information
Document, please see our website at www.bailliegifford.com. This article does not constitute, and
is not subject to the protections afforded to, independent research. Baillie Gifford and its staff may
have dealt in the investments concerned. The views expressed are those of the authors, are not
statements of fact, and should not be considered as advice or a recommendation to buy, sell or hold
a particular investment. If you are unsure whether an investment is right for you, please contact
an authorised intermediary for advice. Baillie Gifford & Co Limited is authorised and regulated by
the Financial Conduct Authority (FCA). The trust is listed on the London Stock Exchange and is not
authorised or regulated by the Financial Conduct Authority.
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