The Motley Fool

Why I’m still buying Scottish Mortgage Investment Trust

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Cogs turning against each other
Image source: Getty Images.

After an incredible run in 2020, the Scottish Mortgage Investment Trust (LSE: SMT) is currently priced at around 1,200p, down considerably from its February all-time high of 1,415p. And I feel the investment trust, managed by Baillie Gifford, provides an opportunity for me at its lower price.

Long-term outlook

The aim of SMT is to be an “actively managed, low-cost investment trust, investing in a high-conviction, global portfolio of companies with the aim of maximising its total return to shareholders over the long term”, according to the April 2021 factsheet. And long term is key here. As such, I have no concerns with the short-term volatility it may currently be experiencing. The trust measures performance over a five-year period. Being a long-term investor, I’m happy with that. And I only have to look at the 100% share price rise in 2020 to see the returns SMT can offer.

One Killer Stock For The Cybersecurity Surge

Cybersecurity is surging, with experts predicting that the cybersecurity market will reach US$366 billion by 2028more than double what it is today!

And with that kind of growth, this North American company stands to be the biggest winner.

Because their patented “self-repairing” technology is changing the cybersecurity landscape as we know it…

We think it has the potential to become the next famous tech success story. In fact, we think it could become as big… or even BIGGER than Shopify.

Click here to see how you can uncover the name of this North American stock that’s taking over Silicon Valley, one device at a time…

So why do I like it for the long term? When looking at the top holdings, I see huge potential. As of April 2021, the portfolio included Tencent, NIO, and Amazon. These companies open avenues for me to the growing tech industry. With the current tech sell-off, I see the exposure SMT can provide to this sector as a good way to diversify my portfolio further, for a good price.

And I like the way the managers think ahead. SMT took the decision to halve its position in Tesla earlier this year, banking a profit before the tech sell-off. Moves like this give me confidence for the future active management of the portfolio.

Risks with Scottish Mortgage Investment Trust

With the above said, I’m aware of the potential risks that come with SMT. First, fund manager James Anderson intends to step down in April 2022. Having spearheaded the rise of the trust, this could arguably leave future performance in question. After all, Anderson was key in the decision to invest in Tesla back in 2013 when the stock was trading at $6. Could his keen eye be a loss in the years ahead?

To add to this, the operation’s large exposure to tech can also be a risk in itself as the current tech sell-off (which my fellow Fool Dylan Hood explained very well) shows. With investor confidence continuing to fall, SMT’s share price could too.

My verdict

The news regarding James Anderson may be a blow for investors. He has delivered incredible returns over his time as fund manager. On top of this, the trust has been volatile recently.

However, as a long-term investor, I’m not put off by this. SMT has a solid track record and I see the current share price as a good opportunity to buy.

The all-time high in February may only be the beginning of what investors could see further down the line. That’s why I’m buying more of the shares now.

One Killer Stock For The Cybersecurity Surge

Cybersecurity is surging, with experts predicting that the cybersecurity market will reach US$366 billion by 2028more than double what it is today!

And with that kind of growth, this North American company stands to be the biggest winner.

Because their patented “self-repairing” technology is changing the cybersecurity landscape as we know it…

We think it has the potential to become the next famous tech success story.

In fact, we think it could become as big… or even BIGGER than Shopify.

Click here to see how you can uncover the name of this North American stock that’s taking over Silicon Valley, one device at a time…

Charlie Keough owns shares in Scottish Mortgage Investment Trust and NIO. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK owns shares of and has recommended Amazon, NIO Inc., and Tesla. The Motley Fool UK has recommended Illumina and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.