Baillie Gifford's Scottish Mortgage Investment Trust has been in the spotlight recently as its shares have dropped more than 50% since the start of the year. The manager of the trust has acknowledged that the past 12 months have been “painful for shareholders” but called for patience and discipline, defending the fund's strategy.
The trust has a long-term focus, with investments in companies such as Tesla and Amazon, and has been praised for staying ahead of trends. However, this strategy has also led to high volatility and a recent sell-off in tech stocks has hit the trust hard.
So far, 2023 has been a poor year for SMT shareholders. Since the start of the year, the shares have dropped from over £13 to around £6. The trust is now trading at a 23% discount to its net asset value, highlighting the challenges it faces.
Despite this, the trust's managers have defended their strategy, stating that they believe in the long-term success of their investments. They have also pointed out that the trust has a diverse portfolio, with investments in a range of sectors and geographic regions.
SMT is not alone in facing challenges. The recent sell-off in tech stocks has hit many investment trusts and funds. However, SMT's size and high-profile investments have made it a particularly visible target.
The trust's managers have emphasized the importance of remaining disciplined and patient during times of volatility. They have also highlighted the trust's long-term track record, which has seen it deliver strong returns over the years.
Investors will no doubt be watching SMT closely in the coming months. The trust's managers will need to navigate a challenging market while staying true to their long-term strategy.
In related news, SMT has named a new chair in an effort to move past recent challenges. The trust remains Britain's largest investment trust, but will need to work hard to regain the trust of its shareholders.
Overall, the challenges facing SMT are a reminder of the risks and rewards of investing in closed-end funds. While these funds can offer high returns, they can also be vulnerable to market shifts and volatility. Investors who choose to invest in closed-end funds should do so with caution and a long-term perspective.