the main points
- The Scottish Mortgage Investment Trust has outperformed the market over the past decade
- Trust has been able to ride the growth of the technology sector
- It has some unique features to help find new ideas
The performance of the Scottish Real Estate Investment Fund
the Scottish Real Estate Investment Trust (LSE: SMT) It has been one of the best performing stocks to own in the London market over the past decade.
If I had invested £1,000 in the company back at the beginning of 2012, I would have been sitting on a lump sum of around £9,700 today. Similar investment in FTSE 100 It will be worth around £2000. Both of these numbers include reinvested earnings.
The trust has outperformed, thanks to its exposure to high-growth internet stocks. In many ways, the company was in the right place at the right time. Exposing it to companies like Tesla And Amazon It coincided with one of the most incredible spikes in tech stocks ever. As money poured into these companies, the value of Scottish mortgage positions soared.
But the success of the investment firm was driven by more than just luck. The portfolio is managed by the Baillie Gifford team, who are focused on finding the next big opportunity.
While there may be some hiccups along the way, these investment managers are willing to focus on long-term growth and overlook short-term market trends.
This is a rare trait among UK fund managers. Many managers focus on short-term performance at the expense of long-term growth, which means they may miss out on the best opportunities.
In fact, the Scottish Real Estate Investment Trust has been a huge success by finding opportunities to grow before the rest of the market discovers the potential. It takes a lot of research and conviction to get to this point.
private market investment
To complement the public market strategy, the company also owns a group of private companies. It is in a unique position to take advantage of opportunities in the private market because the company does not have to worry about investor withdrawals. This is known as a closed investment credit.
Shares are freely traded in London Stock Exchange, but this does not affect the underlying capital base. On the other hand, open funds have to buy and sell investments in line with investors’ deposits and withdrawals. This makes it difficult for them to own private investments, which can be a challenge to buy and sell.
The company has also developed a network to help it find these new opportunities in the private market. This is another competitive advantage of the group over other investment funds.
Unfortunately, this does not guarantee success. Investing in high-growth companies at an early stage can be incredibly risky. If the Scottish Real Estate Investment Trust makes some bad bets, it could cost investors millions of pounds. The fund also charges a management fee of 0.3% per annum. This additional cost can erode shareholder returns in the long run.
Despite these risks and additional cost, I would be happy to add inventory to my portfolio as a growth investment. With its unique structure and track record of finding growth opportunities, I believe the trust has excellent potential.
John Mackie, CEO of Whole Foods Market, an Amazon company, is a member of The Motley Fool’s Board of Directors. Robert Hargreaves has no position in any of the listed stocks. The Motley Fool UK recommended Amazon and Tesla. The opinions expressed about the companies mentioned in this article are those of the author, and therefore may differ from the official recommendations we provide on our subscription services such as Share Advisor, Hidden Winners, and Pro. Here at The Motley Fool, we believe that thinking about a variety of ideas makes us better investors.