Scottish Mortgage delivered total net asset returns of 31.5 per cent in the six months to the end of September, boosted by gains from selling some of its SpaceX shares after the aerospace company's market debut in June. The investment trust, which first invested in Elon Musk's firm seven and a half years ago, saw returns improve significantly compared to 22.9 per cent a year earlier. The trust's share price returned 33.8 per cent over the same period, outperforming the FTSE All World Index benchmark, which returned 16 per cent.
The strong performance reflects soaring valuations in technology stocks, though this week's market selloff has rattled confidence in the sector. US stock markets suffered significant declines, with the tech-laden Nasdaq index falling 5.5 per cent and the S&P 500 index tumbling 4.4 per cent. Scottish Mortgage's share price fell around 4 per cent this week amid broader concerns about artificial intelligence stocks and whether a bubble is forming in the sector.
The market turbulence followed the Democrats' victory in US midterm elections, which prompted concerns that policymakers could halt AI infrastructure development. The investment trust warned that artificial intelligence stocks were on a 'bumpy' path, though chair Christopher Samuel said companies across the world expected to continue spending on AI. 'The path will be bumpy, but the long-term direction is clear,' Samuel said, adding that the board recognised share prices 'may fluctuate significantly' but it was 'important to distinguish such volatility from the more fundamental risk of permanent loss of capital'.
Scottish Mortgage increased its exposure to artificial intelligence during the period, adding to its holdings in Nvidia and Anthropic, which is expected to list imminently. However, the trust reduced its SpaceX holding to 11 per cent after the position became unusually large for the portfolio. It also sold its remaining stake in Tesla, because the trust felt the share price had come to reflect much of its promise in autonomy and robotics.
For UK investors in Scottish Mortgage, the trust's strong underlying returns have been offset by recent share price falls as the AI sector faces heightened uncertainty.