I bought 319 Scottish Mortgage shares for my SIPP in January. Here’s how they’ve done

Scottish Mortgage shares were out of favour in January so Edward Sheldon bought more of them for his pension. Was that a smart move?

Edward Sheldon, CFA

Based in London, Edward is a CFA-qualified investment analyst/writer who has clients all over the world. Before launching his own investment writing business in 2017, he spent 15 years working in private wealth management and institutional asset management. Edward takes an active approach to investing, managing his own individual stock portfolio. He likes to invest in high-quality companies that are poised to benefit from powerful long-term trends, and capable of generating market-beating returns. You can find more of his views, along with his portfolio holdings, at topshelfinvestments.substack.com

Published 20 June, 2024 8:36 am BST

| More on: SMT

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.

In January this year, I bought 319 Scottish Mortgage (LSE: SMT) shares for my SIPP. At the time, the investment trust was really out of favour, and my view was that, over the medium to long term, it had the potential to outperform.

So, how have these shares performed as we approach the half-way mark of the year? Let’s have a look.

Nice gains

In the first week of January, I snapped up 188 Scottish Mortgage shares at a price of 795p per share. Then in the second week, I added another 131 shares at a price of 761p. In total, the two tranches of shares cost me approximately £2,492 (excluding trading commissions).

Now today, the Scottish Mortgage share price is sitting at 880p. So, those 319 shares are worth about £2,807. That means I’ve generated a 13% return in less than six months. That’s not bad at all. For reference, the FTSE 100 index is up about 6%-7% over that time, so I’ve outperformed that by a wide margin.

I’ll point out that I’m also entitled to a dividend, to be paid on 11 July. However, at 2.64p per share, I’m only going to get around £8 here. So, this isn’t a game-changer.

Attractive outlook

As for my view on the shares today, I’m still bullish.

You see, one of the reasons I bought the 319 shares in January was that I was convinced that a lot of the trust’s holdings would perform well when interest rates were cut. And in most countries – including the US and the UK – the cuts haven’t even started yet.

When they do start to take place, I reckon we will see a surge in the shares prices of a lot of up-and-coming growth companies. This could boost the Scottish Mortgage share price further.

Another reason I’m bullish is that the trust owns some brilliant companies. At the end of May, the top six holdings (representing nearly 40% of its assets) were Nvidia, Moderna, ASML, MercadoLibre, Amazon, and Space Exploration Technologies.

Taking a medium to long-term view, all these companies have the potential to generate gains for investors, in my view (even Nvidia, which is already up 200% over the last year). I’m especially excited about Amazon right now. Currently, its valuation is near historical lows.

I’ve right-sized my position

Of course, I’m prepared for volatility with this investment trust. I don’t expect it to rise in a straight line.

If rate cuts are pushed back further, its share price could experience a wobble. It could also take a hit if one of those six companies I just mentioned experienced a setback.

I’m comfortable with the volatility here though. I’ve sized my position so that my overall portfolio won’t be impacted too badly if it does take a hit.