The chair of one of Scotland’s major investment trusts has urged investors to ignore its impressive 12 month return of 14.6% – because longer-term performance is more important.
Fiona McBain, chair of the Scottish Mortgage Investment Trust plc, which is fund managed by Baillie Gifford, said: “Scottish Mortgage is not intended to be all things for all people and is most suited to those who share its patient, long-term approach to investment.
“We aim to report on Scottish Mortgage’s results in a manner consistent with this approach, drawing on the lessons from the managers themselves on the challenges of being long-term shareholders and the dangers of short term distractions. I am delighted to say that the company’s long term progress remains impressive.’’
The total returns over five years is 152.7%, while the 10-year return is 647.4%. The share prices has rising 157.1% in the last five years, and 737.3% over 10 years. These have outstripped the major indices by some margin.
Scottish Mortgage’s holdings include the tech giants but the portfolio also includes retail, advertising and media businesses and companies in healthcare, manufacturing, transportation, financial services, food production and consumption.
McBain cautioned that looking at a single year’s performance is not a proper indicator of performance.
She said: “We report performance figures over the 12 month period within the Annual Report because of the nature of the document and, as it happens, once again these look attractive.
“However, granting these figures undue prominence is not particularly helpful for shareholders of this company and I urge readers to pay little heed to them, whether they be good, bad or indifferent. They reveal little about the success or otherwise of the company in pursuing its aims.”
However in assessing the performance over the past year, she said: “I am pleased to say that, during this financial year, over £400 million in new capital has been generated in this way and there were no share buy-backs undertaken. The board views this as indicative of the degree to which Scottish Mortgage’s unique investment proposition continues to resonate with investors.”
Earnings per share for Scottish Mortgage rose to 1.64 pence, a significant increase of nearly 37% over last year (1.20 pence). However, this was due to the impact of the change in accounting treatment to allocate management and finance costs entirely to capital.