Scottish Mortgage: looking to benefit from AI and more

Few investment trusts attract as much attention as Scottish Mortgage, with Baillie Gifford’s £12bn flagship fund having acted as a bellwether for growth investors for many years. Its interim results for the six months to the end of September were as eagerly awaited as ever and provide an important update on the impact of Artificial Intelligence and other new developments on our daily lives.  

The report notes that we are going through a period of deep technological transformation. AI is reshaping how businesses operate, the infrastructure supporting that change is in high demand and progress is being made in areas as diverse as personalised healthcare, electrification and digital content.¹ 

Objective and approach

Scottish Mortgage aims to identify, own and support the world’s most exceptional growth companies that are driving these developments. The portfolio includes both listed and unlisted businesses, with the goal being to provide long-term funding for the entrepreneurs who are shaping the future of the global economy.²

It has been a challenging few years for investors in the trust, but many of these transformational companies have emerged stronger, more efficient and more ambitious. Managers Tom Slater and Lawrence Burns aim to capitalise on the opportunities by adopting a thematic approach, concentrating the portfolio on key trends such as AI, the digitalisation of commerce and the evolution of transport.³

The underlying portfolio

At the end of October, the portfolio consisted of 46 publicly listed stocks representing 72.8% of the assets, with a further 52 private companies making up the balance. The ten largest holdings included: Space Exploration Technologies, online marketplace MercadoLibre, the Taiwan Semiconductor Manufacturing Company, Amazon, the social media platform ByteDance, and chipmaker Nvidia.⁴ 

Two of the most recent additions are Figma, which is becoming the standard design tool for building websites, apps and digital services; and Xiaohongshu, one of the most popular lifestyle platforms in China. Although all of these stocks operate in different areas, they share important traits in that they are founder-led, ambitious and well placed to benefit from long-term shifts in technology, consumer behaviour and energy.⁵

What are the managers’ latest views?

Writing in the recent accounts, Slater said that AI is reshaping how businesses operate and how decisions are made, but progress is not limited to computing.

“The companies driving these shifts operate across continents, cultures, and sectors but they share the same ambition to reimagine what’s possible….. We are long-term owners, focused on identifying the exceptional few companies that can deliver transformational outcomes over decades.”⁶

Performance

Scottish Mortgage has made a good recovery in the last 12 months, delivering an NAV total return of 34.6% compared with 20.6% from the FTSE All-World benchmark. Over the past five years it has significantly lagged the index, yet the longer-term remains impressive, with a 10-year gain of 449.4% versus 259.7%.⁷ Please remember past performance is not a reliable indicator of future returns.

The broker Peel Hunt says that it was a strong performance from Scottish Mortgage over the six-month reporting period to the end of September and a welcome recovery for this growth strategy. “[It] has benefitted from improved sentiment, particularly towards the portfolio of unlisted investments, which account for circa 27% of the total assets.”⁸

Costs, discount and buybacks

It is great to see that the ongoing charges are just 0.31%.⁹ This is more akin to a global index tracker than a highly successful actively managed fund and is one of the advantages of having significant assets under management.  

The shares currently trade at a 12% discount to NAV, which is similar to the 12-month average.¹⁰ This is despite the fact that the company has bought back £2.6bn of its own shares since March 2024.¹¹  

• More on Scottish Mortgage
• Read: Lessons from investment trust winners and losers of 2025
• Read: Is now the time for ‘quality’ stocks?

Past performance is not a reliable indicator of future returns
Source: Morningstar, total returns from 30.9.20 to 30.9.25. Excludes initial charge.

Source:

^{1, 2, 3, 5, 6, 11} Scottish Mortgage, accounts for the 6 months to 30 September 2025 
^{4, 7, 9} Scottish Mortgage, factsheet 31.10.25
⁸ Peel Hunt research, 7.11.25
¹⁰ Fidelity International

Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. This fund invests in overseas markets and so the value of investments can be affected by changes in currency exchange rates. This fund invests in emerging markets which can be more volatile than other more developed markets. Before investing, please read the relevant key information document which contains important information about each investment trust. The shares in Scottish Mortgage are listed on the London Stock Exchange and their price is affected by supply and demand. Investment trusts can gain additional exposure to the market, known as gearing, potentially increasing volatility. Eligibility to invest in an ISA and tax treatment depends on personal circumstances and all tax rules may change in the future. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.