£3k to invest? I’d buy this surging FTSE 100 stock now!

As the rest of the FTSE 100 has struggled, this tech-focused investment has seen its share price boom in the coronavirus crisis.

| More on:

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.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Investing £3,000, or any other amount in the FTSE 100 right now might seem like a risky proposition. Indeed, the coronavirus crisis is still rumbling on, and it is likely to remain a persistent threat to the global economy for some time. 

However, some FTSE 100 companies are weathering the storm better than others. One operation, in particular, stands out. 

FTSE 100 leader 

The Scottish Mortgage (LSE: SMT) investment trust has one of the best performance records of any London-listed investment business.

It’s easy to see why. Over the past decade, the company has owned some of the fastest-growing tech businesses in the world. Over the past few months, many of these businesses have come into their own. 

For example, the firm’s second-largest holding, online retail giant Amazon, has become a lifeline for many people in the coronavirus pandemic.

Lockdowns around the world have prevented people from leaving their homes to shop. Amazon has been able to step in to fill this need at a time when many other retail businesses have been overwhelmed or forced to close. 

The investment trust’s third and fourth-largest holdings, Chinese technology giants Alibaba and Tencent saw similar benefits when the Chinese economy closed earlier this year. 

All of these companies have substantially outperformed the broader market in 2020. That’s helped Scottish Mortgage gain more than 10% this year. This performance means it is one of the best performing FTSE 100 stocks in 2020 so far. 

Long-term growth

Technology is becoming an increasingly important part of our everyday lives. This trend is only likely to accelerate over the next few years. For many people, technology has been a saviour in the coronavirus crisis, and the changes that have come about over the past few months may mean that we adjust the way we live forever.

This suggests that the outlook for businesses like Amazon, Alibaba and Tencent is bright. Scottish Mortgage could be one of the best ways to gain access to these companies for UK investors.

The FTSE 100 investment company also offers the benefits of diversification. 

Investing in the technology sector can be quite a challenging process. Many technology businesses struggle in their early days, and a large number fail. However, there are fortunes to be made if you can buy the right companies. 

As such, the best way to profit from technological change may be to own a diverse basket of stocks. The FTSE 100 investment trust offers a great way to do this at a click of a button.

Its portfolio contains a total of 89 different companies, spread across 10 different countries. It also owns several businesses in various sectors, which further reduces risk and increases the chance of a positive total return over the long run. 

What’s more, shareholders are set to receive a dividend yield of 0.45%. That’s not much, but it’s better than the interest rate available on most savings accounts today.

All in all, this trust appears to offer a great way to access a globally diversified basket of tech stocks at the click of a button. 

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Rupert Hargreaves has no position in any of the shares mentioned. 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 and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 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.

More on Investing Articles

Investing Articles

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »