Despite widespread volatility in global stock markets lately, the UK’s FTSE 100 index has lost just 2.1% over the past month. However, some FTSE 100 shares have done far worse than others recently. For example, shares in Scottish Mortgage Investment Trust (LSE: SMT) have dived nearly 13% in 30 days.
Scottish Mortgage shares soar
Launched in 1909, the Scottish Mortgage Investment Trust has nothing to do with mortgages or investing in Scotland. Instead, this highly popular investment trust invests heavily in high-growth tech companies, mostly in the US and China. Its top 10 holdings account for 44.3% of the fund’s total assets.
Thanks to its focus on fast-growing US tech stocks, Scottish Mortgage has been the UK’s best-performing retail fund over the past 10 years. Soaring by 697.3% in a decade, SMT has turned £1,000 into almost £8,000 since May 2012. By any measure, that’s an outstanding return from this Baillie Gifford fund.
SMT shares slump
But here’s how Scottish Mortgage shares have performed over seven more recent timescales:
| One day | -2.1% |
| Five days | -5.6% |
| One month | -12.8% |
| Year to date | -36.1% |
| Six months | -43.6% |
| One year | -29.4% |
| Five years | 120.2% |
As you can see, the Scottish Mortgage share price has more than doubled over five years, leaping by over 120%. Alas, over periods of one year and less, this FTSE 100 share has produced shocking returns for shareholders.
At their all-time high on 5 November 2021, Scottish Mortgage shares peaked at 1,568.5p. As I write at Friday lunchtime, they stand at 853.6p, crashing a whopping 45.6% from their 2021 peak. In short, since Bonfire Night, SMT shares have been badly burned.
Bargain or basket case?
As one of the UK’s most widely held investment trusts, the rise and fall of the Scottish Mortgage share price has affected hundreds of thousands of shareholders. Those that got in early (say, before 2020) have done best. Conversely, almost everyone buying over the past six months will have lost money (but perhaps only on paper).
For the record, Scottish Mortgage shares are the 99th-worst performer in the FTSE 100 over the past six months. And they’ve been even lower this year, diving to an intra-day low of 816.2p on 8 March. But when we buy shares, we don’t buy a company or fund’s past — we buy its future.
For Scottish Mortgage shares to rebound going forward, US tech stocks need to undergo another renaissance. Since peaking in November, the Nasdaq Composite index has slumped by nearly a quarter (-24%). But if US inflation starts to cool and interest rates stop climbing, this might trigger another upwards leg for tech stocks. In this scenario, the Scottish Mortgage share price could do well once again.
I don’t own SMT shares and I won’t buy right now. But I will keep a close eye on this volatile stock, with the goal of drip-feeding bits of cash into it at intervals. And if the share price dives again, I might even be tempted to bet bigger on this trust!
