Scottish Mortgage Investment Trust sees Elon Musk’s SpaceX take off
“SpaceX should no longer be thought of as an aerospace contractor but as a dual monopoly” – Tom Slater, fund manager
Scottish Mortgage Investment Trust, the 117-year-old flagship fund of Edinburgh-based Baillie Gifford, has hailed strong annual returns thanks to its backing of high-growth businesses including Elon Musk’s SpaceX.
Results for the venerable FTSE 100-listed trust show that its net asset value (NAV) jumped 27.4 per cent in the year to the end of March, while the share price total return was 26.8 per cent - comfortably outperforming the FTSE All-World Index’s 18 per cent gain over the period.
A notable contributor to the strong performance was SpaceX, which is the fund’s largest holding “by some margin”, chairman Christopher Samuel noted. SpaceX has filed for an initial public offering (IPO).
He said: “While performance over the year is encouraging, it follows a more challenging period for growth investing, which continues to influence the company’s five-year record. Shareholder experience will therefore vary depending on the period considered.
“Over the longer term, however, performance remains strong. The ten-year NAV total return of 435.2 per cent compares favourably with 233.9 per cent from the FTSE All-World Index, reflecting the benefits of a patient, long-term approach.
“As in previous years, we emphasise that one year is too short a timeframe over which to assess performance. Our focus remains firmly on long-term outcomes, and the board continues to believe that the portfolio is well positioned to deliver attractive returns over time.”
The trust continues to focus on long-term growth opportunities, particularly around artificial intelligence (AI) and other innovation.
Over the year, the discount moved “modestly” from about 9 per cent at March 2025 to around 9.5 per cent in March of this year. The total dividend for the year will increase by 4.3 per cent to 4.57p per share, with a final dividend of 2.97p payable to shareholders on July 10.
Samuel added: “Periods of rapid change are rarely comfortable. However, they are often the most rewarding for investors able to remain patient and focused on long-term outcomes.
“The board remains confident that Scottish Mortgage’s approach, of seeking out exceptional companies and supporting them over extended periods, positions the company well to capture these opportunities and to continue delivering attractive long-term returns for shareholders.”
Scottish Mortgage Investment Trust, often referred to as Smit, has been investing in private companies since 2012. It is focused on investing in late stage private businesses that are scaling up and becoming profitable.
Fund manager Tom Slater said: “SpaceX was by far the largest single contributor to returns this year. At the year end, it represented over 19 per cent of the company’s assets, a degree of concentration which is highly unusual for us.
“SpaceX should no longer be thought of as an aerospace contractor but as a dual monopoly: the world’s dominant launch provider and a global connectivity utility with the potential for software-like margins.
“Though the launch vehicles generate the media attention, the valuation has been driven primarily by its satellite communications subsidiary, Starlink, which is building the kind of predictable, highly profitable revenue that the best software businesses aspire to.”
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