Scottish Mortgage Ord

SMT can be highly volatile, delivering exceptional returns when market conditions favour innovative, high-growth companies, but also experiencing meaningful drawdowns when sentiment shifts against them. This makes temperament particularly important. Over the decade to October 2025, for instance, the trust is comfortably ahead of its benchmark, delivering an annualised NAV total return of 18.6% compared to the FTSE All-World’s 13.7%, reflecting the strength of the managers’ long-term approach and ability to identify transformational businesses early. The NAV total return shows what the portfolio has done, not the share price of the trust which can depart from this at times.

But performance over that period has not been even, and investors should expect periods of sharp swings, both positive and negative. The trust’s focus on long-term growth and disruptive innovation can at times run counter to short-term market trends, a pattern clearly visible in recent years. SMT delivered a stellar 106.5% NAV return in 2020 as technology and digital adoption surged during the pandemic. However, the environment turned sharply in 2021 and 2022, when inflation accelerated, interest rates rose, and investors rotated into value and cyclical sectors — areas where SMT has limited exposure — causing it to give up much of those gains. Many of the portfolio’s growth holdings, both public and private, saw valuations compress, whilst the slowdown in IPO activity weighed further on its private investments. This had a significant impact on five-year numbers, shown by our comparison versus an ETF tracking the FTSE All-World Index.

Source: Morningstar
Past performance is not a reliable indicator of future results

Since 2023, however, performance has trended upwards, with the past 12 months marking a particularly strong turnaround despite ongoing volatility, geopolitical uncertainty and cautious consumer sentiment. The trust generated a 34.6% NAV total return and a 35.7% share price gain, comfortably outpacing 20.6% for the FTSE All-World Index. This rebound reflects renewed investor appetite for innovation, as enthusiasm around AI and stabilising interest rates boosted sentiment toward the kind of forward-looking businesses SMT specialises in.

Such results highlight both the opportunity and the challenge of SMT’s distinctive style. When sentiment favours growth, returns can be exceptional; when it doesn’t, the impact can be sharp. For investors willing to accept that journey, SMT offers one of the most compelling routes to capture long-term value creation from some of the world’s most innovative and hard-to-access companies.

SMT invests in some of the world’s most disruptive and innovative companies, with managers Tom and Lawrence preferring to hold these high-conviction positions for many years allowing compounding to work its magic. The portfolio is benchmark-agnostic and tilted toward industries undergoing structural change, often in technology-rich areas such as ecommerce, fintech, healthcare innovation and AI infrastructure. More economically cyclical sectors, like traditional banks and commodities, are largely avoided. Top ten positions account for around 42% of the portfolio, whilst turnover remains low at roughly 10% per year, reflecting the team’s long-term approach.

The managers favour founder-led businesses that reinvest heavily to drive future growth and operate in fast-moving, high-potential markets. As a result, the portfolio can sometimes look more expensive than the wider market on measures such as price-to-earnings ratios, which show how much investors are paying for each pound of profit. However, we think this premium is justified, as the underlying companies held in SMT’s portfolio have, on average, held less debt and delivered much stronger annualised earnings growth over the past five years than the broader market.

Listed equities form the core of the portfolio, around 73% across 46 holdings. Sector exposure mirrors the trust’s mandate, with consumer discretionary, industrials and technology most prominent. Financials remain a smaller allocation, although recent additions, such as Brazilian fintech Nu Holdings, broaden diversification whilst providing exposure to fast-growing digital banking across Latin America. The remaining quarter of the portfolio is invested in private companies, roughly 51 positions, concentrated in high-conviction names such as ByteDance, Stripe, Zipline, Epic Games and SpaceX, the trust’s largest private position. These holdings give SMT a distinctive edge, offering investors exposure to hard-to-access, innovative businesses which could become the public champions of tomorrow.

• A concentrated portfolio means individual holdings can significantly influence performance, which can increase risk.
• Private companies’ exposure may present liquidity problems if demand for the trust suffers
• Its focus on high-growth companies means it may underperform when markets favour cyclical sectors or value-oriented investing.