According to information published on Hargreaves Lansdown‘s website, the most bought stock on its platforms last week was the Scottish Mortgage Investment Trust (LSE: SMT). Deals in this equity made up 8.2% of purchases by the online broker’s clients last week.
The second most bought stock was oil and gas giant BP. Trades in this equity accounted for 5.8% of the total number of deals placed on the firm’s trading platforms.
The Scottish Mortgage Investment Trust is unique among UK shares for exposure to international growth stocks. Unlike other investment trusts and funds, the company has always been willing to take more risk, backing experimental and private businesses.
This approach has more than paid off over the past decade. The group has reaped billions of pounds in profits by backing tech giants such as Tesla and Amazon. When many of its UK peers thought these stocks were too risky, Scottish Mortgage was willing to take the plunge.
The company is now focusing its efforts on China, where it believes there’s a compelling opportunity. The trust’s managers reckon Chinese technology firms, such as Tencent, have a much longer runway for growth in front of them. Even though the country’s economy has grown to become one of the world’s largest over the past two decades, it’s still relatively underdeveloped.
This is where the team at Scottish Mortgage, and its parent Baillie Gifford, see the opportunity. As China’s economy enters its next stage of growth, policymakers are focusing on encouraging technological and economic development. They’re also regulating existing industries. The goal is to eliminate some of the more unsavoury business practices that have destabilised the economy in recent years.
Baillie Gifford also believes that as China grows, it’s becoming harder for Western firms to expand. New regulations, rising costs and increasing competition are all reasons why companies like Amazon may struggle as we advance.
Based on the trust’s track record of picking stocks, I’m inclined to believe they’re on the right track. However, past performance should never be used as a guide to future potential.
Just because the trust has been able to pick the market’s winners over in the past, doesn’t necessarily mean it’ll achieve the same track record over the next 10 years.
Still, when owned as part of a diversified portfolio, I think the Scottish Mortgage Investment Trust could offer investors exposure to a basket of high growth stocks around the world. It also provides access to the highly experienced and accomplished stock picking team at Baillie Gifford.
Based on these reasons, I’d follow Hargreaves Lansdown’s investors and buy the trust for my portfolio today. As a way to build exposure to China and fast-growing technology stocks, I think the company is pretty unrivalled.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Amazon and Tesla. The Motley Fool UK has recommended Hargreaves Lansdown and has recommended the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 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.