Part of the FTSE 100, Scottish Mortgage Investment Trust (LSE:SMT) is run by Edinburgh-based asset manager Baillie Gifford. It contains a number of listed and unlisted companies within its portfolio to which I could gain exposure if I bought it. Currently trading at 911p, it’s down 28% in the past year. Nonetheless, is the current Scottish Mortgage share price attractive? Should I be adding this stock to my long-term portfolio? Let’s take a closer look.
The Scottish Mortgage share price: diversity and expertise
Investing in Scottish Mortgage, which holds a collection of wide-ranging companies, would bring a lot to my portfolio.
Firstly, it would give me geographical diversity. It has holdings in firms ranging from the US to China. Diversity in whatever form can be helpful for growing my own portfolio.
What’s more, Scottish Mortgage would provide me with exposure to both public and private businesses. Given its institutional investing power, it’s able to purchase holdings in unlisted companies.
Such firms include SpaceX, Elon Musk’s space transportation business. It also holds some of the biggest listed companies in the world.
Finally, I would gain access to the expertise of seasoned investment professionals like James Anderson and Tom Slater. Although Anderson is retiring, these two have co-managed Scottish Mortgage since 2015 and Anderson has managed Scottish Mortgage since 2000.
Owing to their management expertise, they bought shares in Tesla back in 2013. Furthermore, Scottish Mortgage made Moderna its largest holding during the pandemic. This company is best known for its production of one of the Covid-19 vaccines.
What are the risks?
There are risks, however. Interest rate hikes in the UK and US may be negatively impacting the Scottish Mortgage share price, as may be happening in the stock market more generally.
The Bank of England has already increased interest rates from 0.5% to 0.75% this year. With more hikes expected, higher interest rates can have a negative effect on company earnings and share prices.
Scottish Mortgage also has sizeable exposure to Chinese stocks. For example, it holds Alibaba and Tencent. These public companies are currently suffering from a number of issues, like supply chain problems, as China pursues a ‘zero-Covid’ policy.
This policy has led to a number of lockdowns in major Chinese cities over recent weeks. It may have a detrimental impact on Chinese companies held by Scottish Mortgage and, by extension, the share price.
On the other hand, these issues could be temporary. It’s possible that they will pass in the longer term and the share price may resume its climb once again.
Overall, this FTSE 100 listing would bring a great deal of diversity and expertise to my portfolio. However, I’m going to wait until the risks subside before buying shares. Despite this, I won’t rule out a purchase at some point in the future.
