As an investor in Scottish Mortgage Investment Trust (LSE: SMT), I tend to keep a close eye on its holdings. I like to know what I’m invested in.
Recently, I noticed that the trust’s holdings have evolved quite a bit lately. With that in mind, here are three things for investors to know.
The top three holdings
Looking at the trust’s latest holding data (as of 30 April), the first thing that struck me was that the trio at the top have had a shake-up in recent months.
At the end of September, its largest holdings were:
- Biotech company Moderna at 6.9% of the portfolio
- Electric vehicle (EV) manufacturer Tesla at 6.8%
- Semiconductor equipment manufacturer ASML at 5.2%
At 30 April, however, the biggest three positions were:
- ASML at 7.8%
- Moderna at 7.8%
- Latin American e-commerce company MercadoLibre at 4.6%
How do I feel about these changes? I’m pretty comfortable with them.
The trust’s largest holding, ASML, is a company I’m very bullish on. Today, semiconductors play a vital role in the global economy, as they power everything from smartphones to EVs. And this company – which sells manufacturing equipment to the likes of Taiwan Semiconductor Manufacturing Company, Samsung, and Intel – is well-positioned to benefit from the growth of the industry.
The Tesla holding
As for Tesla – which has helped Scottish Mortgage produce explosive returns in recent years – it hasn’t disappeared from the trust.
However, it’s now a smaller holding. At the end of April, it was the fourth-largest position in the trust at 4.3% of the portfolio.
This is a positive development, to my mind. I was never comfortable when the EV maker was such a huge position. In my view, this was very risky, as Tesla shares can be very volatile.
A weighting of 4.3% seems reasonable to me, however.
Unlisted companies
One thing that does concern me a little though is that unlisted companies are gaining a larger share of the top 10 holdings.
At 30 April, there were two unlisted businesses in the top six holdings. These were:
- Space technology company SpaceX at 3.7% of the portfolio
- Battery developer Northvolt at 3.5%
By contrast, at the beginning of last year, there were no unlisted companies in the top 10 holdings.
I don’t have a problem investing in unlisted companies. In fact, one of the reasons I hold Scottish Mortgage is for its exposure to such businesses.
However, these can be risky investments. The fact that the two companies represented more than 7.2% of the portfolio at the end of April adds risk here.
I’m staying invested
As for my overall stance on Scottish Mortgage Investment Trust, I’m still comfortable holding it. However, it’s a higher-risk investment.
Therefore, I will keep my position small relative to my overall portfolio and buy plenty of other stocks. That way, I can benefit from any share price rises here without worrying too much about the risk of the price dropping.
