Scottish Mortgage outperforms index despite recent volatility

(Sharecast News) - Scottish Mortgage Investment Trust delivered a net asset value total return of 11.2% for the year ended 31 March, it announced on Thursday, outperforming the FTSE All-World Index's 5.5% gain, despite heightened volatility in early 2025 linked to renewed US-China trade tensions. The FTSE 100 trust's share price return over the period was 6%, with the discount to net asset value widening from 4.5% to 9%.

It said its annual performance was supported by exposure to companies benefiting from structural changes, notably in artificial intelligence and semiconductors.

The company noted, however, that recent market swings underscore the importance of a long-term investment horizon, with chair Justin Dowley cautioning that returns from growth-focused strategies are unlikely to follow a linear path.

Its board confirmed an increased total dividend of 4.38p per share, up 3.3%, extending Scottish Mortgage's record of 42 consecutive annual dividend increases.

Revenue earnings per share fell by 40% year-on-year due to the write-off of income from a Northvolt promissory note, though the underlying equity income was stable.

Ongoing charges remained low at 0.31%, with the trust emphasising its competitive cost structure and value-for-money proposition, particularly given its hybrid portfolio of public and private companies.

Gearing rose modestly to 13%, while the average interest cost on debt was broadly unchanged at 3.1%.

In response to the growing share price discount, the company repurchased 210 million shares during the period at a cost of £1.9bn, part of a previously-announced £1bn buyback commitment over two years.

Since the March 2024 announcement, total repurchases had reached £2bn.

Looking ahead, the trust said it remained focused on identifying innovative companies positioned to benefit from long-term trends.

The board said it had confidence in the managers' ability to navigate a changing investment environment, citing themes of resilience, adaptability and digital transformation.

Chair Justin Dowley was set to retire at the upcoming annual general meeting in July, to be succeeded by Christopher Samuel.

Senior independent director Professor Maxwell was meanwhile due to step down in 2026.

At 0846 BST, shares in Scottish Mortgage Investment Trust were down 0.93% at 984.8p.

Reporting by Josh White for Sharecast.com.