My best stocks to buy now list is categorised, and one of these categories is FTSE 100 stocks. One of these stocks is an investment trust that has fallen in price recently so I want to know why and whether this is a buying opportunity.
High on my best stocks to buy now list
FTSE 100 incumbent Scottish Mortgage Investment Trust (LSE:SMT) is a publicly traded investment trust that invests in stocks globally. Its focus is on strong businesses with above-average returns. There are no constraints as to industry, geography, or sector.
Scottish Mortgage has performed consistently well for a number of years. It is currently classed as the biggest investment trust in the UK and the 31st largest company listed in London. With a market value of nearly £18bn, it is a giant in its respective sector. What draws me to SMT is the fact it invests heavily in tech stocks. It has also taken the step of diversifying into the crypto world which offers it an edge over other investment trusts.
Dip in share price
There are two reasons the SMT share price dipped. Firstly, co-fund manager and seasoned investment guru James Anderson announced he is stepping down after 39 years with Baillie Gifford. In addition, tech stocks experienced a dip on the FTSE 100 and elsewhere due to valuation concerns by investors.
As I write this, the SMT share price is trading for 1,113p per share. This is a 20% drop since February 2021, which is substantial. If I compare the FTSE 100 index as a whole in the same period, its price has risen close to 3%.
FTSE 100 opportunity for the long term
As a Foolish investor, I am looking for safe, long-term investments and class Scottish Mortgage as just that. Here’s why.
Firstly, SMT will see the departure of James Anderson but co-fund manager Tom Slater will continue to run the fund. He is also a seasoned fund manager and has worked with Anderson for a number of years. Next, I believe the FTSE 100 incumbent will benefit from reopening with its diversified portfolio. Furthermore, I am very bullish on tech stocks due to their continuous ability to grow and expand, so I am not worried.
Finally, Scottish Mortgage has the experience of success and ability to invest successfully embedded into its core. Since 2000, its share price has risen over 1,500%. This is the equivalent of turning £1,000 into £18,000. I know past performance is not an indicator of future performance but it definitely helps me when making a decision to invest if a FTSE 100 firm from my best stocks to buy now list has a good track record.
There are risks involved with Scottish Mortgage, however. The FTSE 100 investment trust saw its share price rise to an all-time high which could mean it may not increase much further. In addition, the departure of James Anderson next year could have a long-term negative effect. SMT’s success has been underpinned by the duo of Anderson and Slater.
Despite these risks, I am bullish on Scottish Mortgage and it is firmly one of my best stocks to buy now from the FTSE 100. SMT invests over the long term, which suits my investment style. It also has a diverse portfolio, which protects my money. I class it as a FTSE 100 opportunity at its current price point especially.
Jabran Khan has no position in any of the shares mentioned. 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.