OVERVIEWThe value of investments and any income from them may go down as well as up and you or your client may not get back the amount originally invested.
Launched in 1909, Scottish Mortgage is considered to be Baillie Gifford's flagship investment trust. These days the trust is Global rather than Scottish and has nothing whatsoever to do with mortgages.
Low cost, global investment trust
Scottish Mortgage is a low-cost equity fund which invests on a global basis. Stocks are carefully selected for their strong growth prospects. The trust aims to outperform world stock market indices over a five year rolling period.
The trust has a long term investment horizon and invests with real patience. The portfolio is driven by corporate attraction rather than index construction. The managers see themselves as owners of companies rather than renters of stocks.
The resolutely global approach taken by the trust is reflected in the current investment themes such as the speed of technological advances and how they can disrupt established business practices, and the re-emergence of China as an economic superpower.
As at 30 September 2017, Scottish Mortgage had total net assets of more than £5 billion, making it one of the UK's largest investment trusts.
The investment trusts managed by Baillie Gifford & Co Limited are listed UK companies. The value of their shares, and any income from them, can fall as well as rise and investors may not get back the amount invested.
Scottish Mortgage is an investment company within the meaning of section 833 of the Companies Act 2006. Registered in Scotland. Registered number: SC489. Registered office: Calton Square, 1 Greenside Row, Edinburgh, EH1 3AN.
Meet the Trust ManagersJames Anderson
James graduated BA in History from Oxford University and after postgraduate study in Italy and Canada he gained an MA in International Affairs in 1982. He is a Trustee of the Johns Hopkins University. He joined Baillie Gifford in 1983 and became a Partner in 1987. He headed our European Equity team until 2003 when he co-founded our Long Term Global Growth strategy. He has Chaired the EAFE Alpha Portfolio Group since its inception in 2003 and has been the Manager and then Joint Manager of Scottish Mortgage Investment Trust since 2000. He has also served as a member of the Advisory Board of the government sponsored Kay Review and as Chair of the subsequent industry working group that set up the UK Investor Forum. James is a member of the Firm’s Strategic Leadership Group.Tom Slater
Tom graduated BSc in Computer Science with Mathematics from the University of Edinburgh in 2000. He joined Baillie Gifford the same year and worked in the Developed Asia and UK Equity Teams before joining the Long Term Global Growth Team at the start of 2009. Tom became a Partner in the firm in 2012. Tom was appointed Joint Manager of Scottish Mortgage Investment Trust in January 2015 having served as Deputy Manager for the previous five years. In 2015 Tom was appointed Head of the US Equities Team and is a decision maker on Long Term Global Growth portfolios. Tom’s investment interest is focused on high growth companies both in listed equity markets and as an investor in private companies.
Meet Our DirectorsChair - FC McBain
Fiona McBain is the former chief executive of Scottish Friendly Assurance, a mutually owned financial services group with over 1,000,000 policyholders. Fiona was appointed a Director in 2009. Before joining Scottish Friendly in 1998, Fiona, a chartered accountant, was employed by Prudential plc and Arthur Young (now Ernst & Young) where she spent some time working across a number of industry sectors, both in the UK and in the United States. She is also a trustee of Save the Children UK and non-executive director of the Humanitarian Leadership Academy and Dixons Carphone plc.Director - Professor JA Kay
John Kay has a distinguished record as an economist, academic, author and commentator on business, government and economic issues. John was appointed a Director in 2008. He is a fellow of St John’s College, University of Oxford and Investment Officer of the College and he is a director of Value and Income Trust PLC.Director - Dr P Subacchi
Paola Subacchi is an economist, writer and commentator on the functioning and governance of the international financial and monetary system. Paola was appointed to the Board in 2014. She is the author of ‘The People’s Money: How China is building a global currency’ (Columbia University Press, 2017). She is a senior fellow at Chatham House, visiting professor at the University of Bologna, a governor of St Marylebone School in London and an advisory member of Wilton Park (FCO). An Italian national, she studied at Università Bocconi in Milan and at the University of Oxford. In 2016 she was awarded the honour Cavaliere della Stella d’Italia.Director - LJ Dowley
Justin Dowley is a former international investment banker and was appointed a Director in September 2015. He qualified as a chartered accountant at Price Waterhouse in 1980. Subsequently he was a director of Morgan Grenfell & Co. Limited, Head of Investment Banking at Merrill Lynch Europe and a founder partner of Tricorn Partners LLP. Formerly the Chairman of Intermediate Capital Group plc he is currently a non-executive director of Melrose Industries plc, Novae Group plc and a number of private companies.Director - Professor PH Maxwell
Patrick Maxwell is the Regius Professor of Physic and Head of the School of Clinical Medicine at Cambridge University. He was appointed a Director on 1 April 2016. Patrick has extensive knowledge and experience of the biotechnology sector and holds a Wellcome Trust senior investigator award for his research on oxygen sensing. He was elected a Fellow of the Academy of Medical Sciences in 2005. He is currently a director of the Global Medical Excellence Cluster (GMEC) and a member of the boards of MedCity, Cambridge University Health Partners (CUHP) and Cambridge University Hospitals NHS Foundation Trust.
Today we invest in electric cars. But it all started with this one.
Scottish Mortgage carries on business as an investment trust. The objective is to maximise total return from a portfolio of long term investments chosen on a global basis, enabling the Company to provide capital and dividend growth.
Investment is predominantly in equities. The number of equity holdings will typically range between 50 and 100 and the portfolio can be relatively concentrated. Achieving diversification is a requirement when selecting investments but an unconstrained approach is adopted and there are no fixed limits set as to geographical, industry and sector exposure. Portfolio concentration and levels of diversity are monitored by the Board on a regular basis. The maximum investment in any one holding is limited to 8% of total assets at the time of purchase.
A long term investment horizon is observed and little attention is paid to short term market trends when deciding strategy. This patient approach allows market volatility to be exploited to shareholders’ long term advantage. An average holding period for investments of five years or more is targeted.
The major part of the portfolio will be held in quoted equities with good liquidity. Investment may also be made in fixed interest securities, convertible securities, funds, unquoted entities and other assets based on the individual investment case. The maximum amount which may be invested in companies not listed on a public market shall not exceed 25 per cent of the total assets of the Company, measured at the time of purchase.
With prior approval of the Board, the Company may use derivatives for the purpose of efficient portfolio management (for the purpose of reducing, transferring or eliminating investment risk in its investment portfolio, including protection against currency risk) and for investment purposes. The maximum permitted investment in other UK listed investment companies in aggregate is 15% of gross assets.
The Company aims to achieve a greater return than the FTSE All-World Index (in sterling terms) over a five year rolling period or longer. This benchmark is a reference point for considering performance and emphatically is not a portfolio construction tool. The portfolio does not set out to reproduce the index and there will be periods when performance diverges significantly from the benchmark.
Borrowings are invested in equity markets when it is believed that long term investment considerations merit the Company taking a geared position. Apart from in exceptional market conditions the Company will not take out additional borrowings if, at the time of borrowing, this takes the level of gearing beyond 30% calculated in accordance with the Association of Investment Companies (AIC) guidelines. In any event, the Company will not exceed the limit on borrowings set out in its articles of association, which provide that the amount of all the Company’s borrowings shall not, without the previous sanction of an ordinary resolution of shareholders, exceed one half of the aggregate issued and fully paid share capital and capital reserves of the Company and, in addition, that the Company may from time to time borrow for temporary purposes sums not exceeding 20% of the Company’s issued and fully paid share capital.