A decade ago, Scottish Mortgage Investment Trust (LSE:SMT) shares were trading for 200p. That means that shares in the company have increased by 259% in the 10 years to today. It has vastly outperformed the FTSE 100, and unsurprisingly, it’s one of the best performers on the index over the period.
As such, if I had invested £1,000 in the growth-focused trust a decade ago, today I’d have £3,590 plus some dividends. The company isn’t a huge dividend payer, with a meagre 0.58% dividend yield at this time.
However, as many investors will recall, the Scottish Mortgage share price has been higher. In fact, during the pandemic, shares were changing hands for more than double the current share price.
Would I be kicking myself if I hadn’t sold in late 2021? Probably. After all, I could have always bought the stock again at a lower price.
Repeatable success
Scottish Mortgage is a Baillie Gifford trust, and it’s got a team dedicated to forecasting future innovation and disruptive technology trends.
Over the past decade it’s been very successful at this. It’s had positions in companies like Tesla and Nvidia before they became household names. And this has driven the company’s success.
The big question is whether this success is repeatable going forward?
Well some skeptics may note that James Anderson, who managed Scottish Mortgage from 2000, left Baillie Gifford earlier in the year.
The portfolio is now in the hands of his successor, Tom Slater, who joined Baillie Gifford in 2000 and became a partner of the firm in 2012.
Optimism
Personally, I’m optimistic about the trust’s ability to seriously outperform the market again. The company hasn’t undergone a strategic direction change under Slater and it’s highly likely, given the fund’s track record, that the next ‘big winners’ — as Anderson used to called them — are already in the portfolio.
One holding that raises my interest is Elon Musk’s SpaceX (Space Exploration Technologies Corp). When I last wrote about SpaceX on 10 November, the company represented 3.9% of the Scottish Mortgage portfolio. Two weeks later that increased to 4.1% — the seventh-largest holding.
SpaceX really could be the next big winner. In 2022, the Starlink side of the business, which provides internet service through the company’s satellite constellation, had a cash flow positive quarter in 2022. SpaceX as a whole reported recorded its first profitable quarter in Q1 of 2023.
But space is big business, and as SpaceX isn’t listed, Scottish Mortgage is one of the future ways to gain exposure to the company. In 2022, the worldwide space economy expanded by 8%, achieving a market valuation of $546bn. Now analysts expect 41% growth over the coming five years.
SpaceX, using the most recent data, is trading around 16.6 times sales and has a valuation of $150bn. That may sound like a lot, but Musk’s company is in a commanding position to dominate.
So, this is why I’m optimistic about Scottish Mortgage. It invests in highly exciting companies that look set to change the world we live in.
