What’s going on at resurgent Scottish Mortgage?

Important information - the value of investments and the income from them can go down as well as up, so you may get back less than you invest.

• Read: The funds that already invest in SpaceX

What is behind this strong recovery?

The biggest driver is the strong performance of several of the trust’s biggest holdings. SpaceX has been the standout contributor, with a total return of 179% over the year to March, although the likes of TSMC, ASML and Nvidia also made significant contributions.

In his review of the year written for the trust’s annual results, published at the end of May, co-manager Tom Slater said: ‘SpaceX was by far the largest single contributor to returns this year. At the year end, it represented over 19% of the [trust’s] assets, a degree of concentration which is highly unusual for us.’ He went on to acknowledge that ‘it would be remiss not to acknowledge the potential for volatility that comes with a position of this size’.

Other big contributions to the trust’s strong performance over the financial year to March came from Taiwan Semiconductor Manufacturing Company (TSMC), as well as the chipmaking machine manufacturer ASML, the unlisted payments firm Stripe and chipmaker Nvidia, whose total returns over the period were 99.1%, 94.2%, 72.2% and 57.5% respectively, according to an update from the trust for the first quarter of 2026.

Scottish Mortgage was able to turn these impressive figures into big gains for the trust because of its substantial holdings in those companies – 11.1% was the average percentage of the portfolio devoted to SpaceX over the year, while TSMC accounted for 5.4%. Although naturally some holdings lost money, the scale of losses and the exposures were lower.

Meituan, the Chinese tech platform, was the biggest detractor from the trust’s performance over the year, but its average position size was 2% and its total return was minus 48.3%.

That’s the story behind the rise in value of Scottish Mortgage’s portfolio of stocks, but with investment trusts there is another factor at play: the value that the market chooses to give that portfolio, in other words the trust’s discount or premium. Over the past year this too has played out to the share price’s benefit, as the shares have gone from trading at a discount of 10.7% a year ago to a premium of 6.4% at the time of writing.

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Are there risks in holding Scottish Mortgage?

There is risk in any investment, but there are a couple that stand out in Scottish Mortgage’s case at present. The first is the large percentage of the portfolio devoted to a single stock, SpaceX, as the manager acknowledged.

Then there are the significant holdings in other private companies, such as 4.8% of the portfolio in ByteDance, the Chinese company behind TikTok, and 3.7% in Stripe. In all, private holdings make up 41.3% of the portfolio. Private company valuations are a matter of judgement rather than fact and the holdings could be difficult to sell if the managers were to want to reduce their exposure. The trust is heavily exposed to the tech sector generally, which could make it vulnerable to any swing in market sentiment away from technology.

The risks posed by the large SpaceX holding are potentially greater as a result of the conditions that will apply to existing shareholders who may want to sell some of those shares in the public market once the flotation has taken place.

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The IPO paperwork mentioned certain (unspecified) ‘significant investors’ having a 366-day lock-up period alongside Elon Musk, while all other existing investors have a 180-day lock-up, subject to a staggered release of part of their holdings starting shortly after the publication of the company’s results for the second quarter of 2026, according to a research note from Jefferies, the investment bank. This means that Scottish Mortgage will not have a free hand to sell SpaceX shares straight away and may have to wait as long as a year.

Fund facts: some key points of Scottish Mortgage’s portfolio:

• Private companies account for three of its top five holdings (SpaceX at No 1, ByteDance at No 3 and Stripe at No 5)
• It holds stakes in 53 private companies in all and has carried out 525 revaluations of those stakes over the past year
• It has stakes in more than half of the world’s 10 most valuable private companies
• Five of its top 30 holdings have been held by the trust for more than 10 years (Amazon, ASML, Meta, Netflix and Atlas Copco)
• Its holdings have been growing more quickly (22.5% annualised profit growth over the past five years) than its benchmark index (FTSE All World, 11.7%), although they are more highly valued (a forecast price-to-earnings ratio of 24 for the trust against 16.5 for the index)

Source: Scottish Mortgage Quarterly Data Pack, 31 March 2026

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Past performance is not a reliable indicator of future returns
Source: FE, share price total returns from 3.6.21 to 3.6.26. Excludes initial charge.